In preparation for its proposed $70 billion merger with Travelers Group, Citicorp has been slashing jobs in its corporate bank. The $330 billion-asset banking company told 50 employees in its U.S. corporate bond group last week that their positions would be eliminated when that business is folded into Travelers' Salomon Smith Barney subsidiary.
The cuts-affecting a third of the bank's high-yield and investment-grade bond staff-are in underwriting, research, trading, and sales, a Citicorp spokeswoman said. "We have been reviewing our business to see where our strengths were, and we decided after taking that review to reduce staff in this unit," the spokeswoman said. The notices were given to workers in person last Wednesday, she added.
Further cuts on both the wholesale and retail sides of the bank are likely as Citicorp continues to review its businesses, the spokeswoman said.
Analysts said the move reflects Citi's expertise in lending and Salomon's in underwriting.
"Citi's wholesale strategy has not been to be all things to all people," said Bradley Ball, an analyst at Credit Suisse First Boston. "They targeted select clients and tried to provide them with what they would need internationally."
"Salomon has had more of a presence in debt and equity," he said.
Salomon ranked No. 2 among U.S. investment-grade bond underwriters in the first half of the year, lead-managing $56.2 billion of issues, according to Securities Data Co. It ranked No. 3 among high-yield underwriters, with $14 billion of issues. Citicorp, by contrast, ranked No. 19 among U.S. investment-grade underwriters, at $595 million; and No. 17 in high-yield debt, at $948 million, according to Securities Data.
Mr. Ball and other analysts said Citi would probably retain more control over foreign exchange and lending at the new Citigroup.
Some of Citi's U.S. corporate bond employees departed as Salomon's role became clear. In June, 15 members of the high-yield group defected to Fleet Financial Group of Boston, which has been building its capital markets expertise. In July, Citi and Travelers announced that Salomon's fixed- income chief, Thomas G. Maheras, would run global fixed-income activities at Citigroup.
Julian Simmons, Citi's current head of U.S. corporate bonds, would head foreign exchange and structured finance.