According to a memo sent to U.S. employees today, New York-based Citigroup will consolidate its U.S. residential mortgage business, combining origination, servicing and capital markets activities.
Citi said the new structure will allow it to develop:
– Uniform products, policies and practices for mortgage offerings;
– Portfolio and capital objectives focused on reducing mortgage exposure, especially in higher-risk segments;
– A single P&L for mortgage-related activities;
– Best practices with respect to pricing, risk management and return analytics;
– Consolidated and streamlined functions; and
– A more consistent face to our clients, regulators and other stakeholders.”
It is unclear if any jobs will be lost as a result of the restructuring, or when it will be completed.
The unit will be headed by Bill Beckmann, the current president and chief operating officer of CitiMortgage Inc.
“In this role, Bill will work closely with Jeff Perlowitz, the CMB head of Global Securitized Markets (GSM), to determine how to best integrate Citi Residential Lending’s origination and servicing functions and those in CitiMortgage,” the memo stated.
CitiMortgage had previously been separate from the loan operations in Citi’s banking unit.
The mortgage origination activities of CitiFinancial, Citibank and Smith Barney branches will remain exclusive from the new division.
In mid-September, the bank launched Citi Residential Lending, a non-conforming wholesale lending unit specializing in Alt-A and non-prime mortgage programs.
Citi Had Been Reporting Big Losses
Since then, Citi has reported billions of dollars in write-downs tied to bad subprime mortgage bets, leading to the ousting of its CEO and rumors of records layoffs.
The largest U.S. bank may also be forced to write down $16 billion in the fourth quarter and post a much larger loss than previously estimated, Merrill Lynch analyst Guy Moszkowski said today.
CNBC television also reported that current CEO Vikram Pandit might cut 5 to 10 percent of Citigroup’s work force, on top of the 17,000 job cuts announced last April.
Shares of Citigroup ended the day down $1.12, or 3.96%, to $27.14, representing a new 52-week low for the embattled financial giant.