Citigroup is planning to slash its technology costs in a bid to save more than $1bn in 2009 across its vast technology estate.
The world’s biggest bank, which prides itself on being a technological innovator, believes it can cut costs by integrating the hundreds of disparate legacy IT systems that resulted from the 1998 merger between John Reed’s Citicorp and Sandy Weill’s Travelers.
According to a report in the UK’s Financial Times newspaper, many of the bank’s businesses have never been fully integrated, largely because of the complexity, cost, and risk associated with integrating multiple systems. Mr Weill, who ran Citi until 2003, is also reported to have favoured the separation of IT systems because it made it easier to spin off business units, says the FT.
While Citi does not reveal detailed operations and technology costs, its regulatory filings show that IT and communication expenses were $4.9bn in 2008. Operations costs are believed to amount to several billions more.
The bank originally believed it could save $3bn over three years by rationalising its systems and operations – which currently employ more than 140,000 people. However, rapid progress in reducing overlaps and integrating infrastructure across business units has prompted Citi to increase this target.
The move forms part of chief executive Vikram Pandit’s strategy to rebuild the embattled company that has been repeatedly bailed out by the US government.
