Citi India is waking up to danger...
Jack Welch once said, “If change is happening faster on the
outside... the end is in sight.” Citigroup Inc., the largest US banking conglomerate which has been hit by rattling losses of $14.94 billion during the past two quarters, seems to have taken Neutron Jack’s ‘global’ 10-80-10 rule (where he fired the bottom 10% performers) to heart, in India too!
With its Indian operations hit by repurcusions of the ‘great American Citi downfall’, change on the outside seems to be dangerously working faster for Citi India. As a reaction, it recently closed down 72 CitiFinancial branches in the country and laid-off more than 400 employees. Globally, it chopped-off 30,000 names off its rolls in the past five quarters, so rightly, India too became a part of its ‘slim-down’ therapy. A report on Citi’s credit opinion by Moody’s investors’ service shows that Citi is facing problems in risk positioning, efficiency, profitability and asset quality – the very pillars of any financial entity!
Citi India doesn’t have many reasons to complain about the cuts as even when the count of Citibank India employees rose by 221.80% in the past four years to touch 5,194 in 2007, the profit/employee has plummetted disgrcefully by 29.17% during the same period to Rs.1.7 million. With ROA also falling by 23.30% to a low of 2.79 during the same period, speculations are also rife that CitiFinancial India is weighing the option of hiving-off its India operations, a move not supported by an NBFC analyst who avers, “Despite global hits making life tougher for Citi in India, exiting makes no sense for Citi at this point of time.” Sandeep Hebber, Sr. Analyst, Celent also presents an explanation, “In India, default rate for unsecured loans has been rising and the risk-return ratio has been deteriorating over the past 2-3 quarters. Clearly, Citifinancial has been hit owing to the higher default rates.” With sub-prime crisis causing tightening of lending norms, thereby cutting down on portfolio of sub-prime loans, reducing operating costs by reducing manpower count is just one way out to make changes happen within, faster than without; Chop on, but never slip (sleep?)!
For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2008
Jack Welch once said, “If change is happening faster on the
outside... the end is in sight.” Citigroup Inc., the largest US banking conglomerate which has been hit by rattling losses of $14.94 billion during the past two quarters, seems to have taken Neutron Jack’s ‘global’ 10-80-10 rule (where he fired the bottom 10% performers) to heart, in India too!With its Indian operations hit by repurcusions of the ‘great American Citi downfall’, change on the outside seems to be dangerously working faster for Citi India. As a reaction, it recently closed down 72 CitiFinancial branches in the country and laid-off more than 400 employees. Globally, it chopped-off 30,000 names off its rolls in the past five quarters, so rightly, India too became a part of its ‘slim-down’ therapy. A report on Citi’s credit opinion by Moody’s investors’ service shows that Citi is facing problems in risk positioning, efficiency, profitability and asset quality – the very pillars of any financial entity!
Citi India doesn’t have many reasons to complain about the cuts as even when the count of Citibank India employees rose by 221.80% in the past four years to touch 5,194 in 2007, the profit/employee has plummetted disgrcefully by 29.17% during the same period to Rs.1.7 million. With ROA also falling by 23.30% to a low of 2.79 during the same period, speculations are also rife that CitiFinancial India is weighing the option of hiving-off its India operations, a move not supported by an NBFC analyst who avers, “Despite global hits making life tougher for Citi in India, exiting makes no sense for Citi at this point of time.” Sandeep Hebber, Sr. Analyst, Celent also presents an explanation, “In India, default rate for unsecured loans has been rising and the risk-return ratio has been deteriorating over the past 2-3 quarters. Clearly, Citifinancial has been hit owing to the higher default rates.” With sub-prime crisis causing tightening of lending norms, thereby cutting down on portfolio of sub-prime loans, reducing operating costs by reducing manpower count is just one way out to make changes happen within, faster than without; Chop on, but never slip (sleep?)!
For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2008
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