While Citicorp's top executives grapple with issues related to the company's planned $70 billion merger with Travelers Group, those in the trenches are busy carrying out its six-month-old restructuring program.
"We continue to operate the bank around the world on the same basis," said Thomas Jones, Citicorp's chief financial officer. "And restructuring figures high on the agenda."
Citicorp announced the reorganization in October, taking an $889 million charge in the third quarter to cover the cost of upgrading its computer systems and eliminating 7,500 jobs.
Mr. Jones, responding to analysts' questions at a meeting last week, said the merger with Travelers has not distracted the banking company from its restructuring. In fact, he said, the merger should help move the reorganization forward.
"We all understand that we need to get economies," he said. "We are engaged in a lot of efforts that the merger should galvanize."
Analysts said the program will be just the beginning as the company combines its operations with Travelers to form Citigroup. "The merger creates the potential for another layer of restructurings a couple of years from now," said George Bicher, an analyst at BT Alex. Brown.
Citicorp has the luxury of time, analysts said. Unlike a merger between two banks, which often requires rapid melding of customer data files, computer systems, and computer operating platforms, the Citicorp-Travelers deal will not require immediate consolidation, they noted.
The companies can continue to operate separately while they decide the best course of action, analysts said.
"Ultimately, they're going to have to take different systems and transfer them over into one," said David Berry, an analyst at Keefe, Bruyette & Woods Inc. "But they should have them standardized" in their own companies first, he said.
The lack of urgency to move the companies onto one computer network means Citicorp has leeway to finish its current reorganization before merging with Travelers, analysts said.
Citicorp has been focusing most of its restructuring efforts on back- office operations and the technology supporting the bank's global consumer businesses.
"The merger will not have any impact on the vast majority of Citicorp's operations," said Lawrence Cohn, an analyst at Ryan, Beck & Co.
Citi's wholesale relationships with multinational corporations and some of its trading operations will probably feel the impact of the merger the most because these overlap substantially with business units at Travelers, Mr. Cohn said. But the restructuring is not affecting those areas.
"It's fully appropriate for them to go on with the restructuring," he said.
Teams of Citicorp executives have been formed to discuss and carry out restructuring plans and to do routine operating reviews, Mr. Jones told analysts. Those teams have met often in recent months, he said.
The restructuring will include the consolidation into 10 facilities of 50 major data centers worldwide, the company said.
Another project would create two regional "utilities" to handle the bulk of Citicorp's check clearing, payment processing, and account statement activities. These activities are currently handled in eight sites.
By the end of the first quarter, the company said, it had spent about $360 million, or 40%, of the money set aside for the restructuring, which is to be substantially completed by yearend.
About 30% of the $360 million has gone toward severance packages, the company said.
