WASHINGTON — Citigroup (NYSE: C) threw an executive-studded party to celebrate the opening of a new branch in the nation's capital on Wednesday, even as the bank closes branches elsewhere.
The third-largest bank announced in December the closure of 44 U.S. branches and 11,000 job cuts, as part of new Chief Executive Michael Corbat's efforts to cut costs and accelerate the bank's recovery from the financial crisis. Since abruptly replacing Vikram Pandit in October, Corbat has worked to convince shareholders that Citigroup can improve its flagging revenues and revitalize its internationally-focused consumer bank.
But part of his consumer strategy appears to be copied directly from Pandit's playbook. In an event that resembled similar branch openings under Pandit, Corbat presided over a ribbon-cutting ceremony Wednesday at a month-old, technology-heavy branch in Washington's commercial center, known as the "Golden Triangle." Senior executives in attendance said the event emphasized Citigroup's ongoing commitment to competing for branch business in the world's biggest cities, even as it pulls back from less central locations.
"Obviously, this nation's capital would be on that list" of big, important cities, Cece Stewart, president of Citi's U.S. consumer and commercial bank, said in remarks at the opening.
As customers strode past to do their banking, Corbat told an audience of about 40 people that Washington is one of "those cities that … our consumers really want to be active in, and where the demographics of much of the world are headed."
Corbat said Citigroup is over 80% toward a goal to be active in 150 major metropolitan areas around the country. The bank currently has 16 branches in Washington proper and 43 in the metropolitan region. The city is among 14 major U.S. markets where Citigroup has a branch presence; its recent closures affected locations in areas including Pennsylvania, Massachusetts and New Jersey.
Even before its recent branch closures, Citigroup's U.S. branch network was much smaller than those of rivals JPMorgan Chase (JPM) and Bank of America (BAC). The bank's failed bid for Wachovia during the financial crisis would have dramatically bulked up its branch numbers, but since then Citigroup has stopped trying to compete on the same scale in this country.
"We don't necessarily have the largest branch footprint in the world. We've got a lot of branches. But some of our peer group have more," Corbat said Wednesday. "For us, it's not just about the number of branches, but it's about the quality of branches and the quality of service that we provide in those branches. We say that many of our peer group have probably more branches east of the Mississippi than we have across the U.S."
In the past few years, Pandit emphasized the consumer bank's international footprint and the wealthy, urban, tech-savvy customers it could bank around the world. In 2010, he attended an opening of the company's first "flagship" U.S. branch in Manhattan's Union Square. The following year, company executives attended a similar ribbon-cutting to open the second U.S. flagship branch in D.C.'s Foggy Bottom neighborhood.
Like those other two locations, the new Washington branch boasts flashy technology, including enhanced-image ATMs and digital screens embedded into the walls that provide information on rates for retail products. Citigroup also touted the new branch's green energy bona fides, including a certification for Leadership in Energy and Environmental Designed, or LEED.
In an interview, Stewart indicated the previous branch closures had been planned before Corbat succeeded Pandit, and she said the opening of the Washington branch is "totally aligned with where we're headed."
Citigroup regularly "evaluates" its network "to see where we have branches that might be not performing as well as some others," Stewart said.
She added that achieving the "right mix" of physical branches and digital banking services is a focus for everyone in the industry. "Physical [branching] is still important. The clients over time are moving more and more to digital."