Citi announced a slew of cost cutting measures today, all aimed at reversing the bank’s declining revenues and getting rid of the sad trombone that plays on loop in the lobby. A ban on offsite meetings, mandatory use of both sides of the paper when printing, and the curtailment of color copies (which will be enforced by physically removing many of the building’s color copiers, because apparently you can’t be trusted*) are all on the list of behaviors that will no longer be tolerated. At first glance they come off as merely asinine rules that won’t amount to jack. This assessment could not be further from the truth. In fact, we expect that they will contribute to the exact intended outcome senior execs at Citi are hoping for.
Look, Count Vikula isn’t stupid. He’s aware of the crippling adversity faced by Citi, and has come to terms with the fact that profitability and success are just not in the cards. Rather than spend the next few years beating around the bush as the stock drops to ten (two? whatever), he’s decided to take the next few months to sink this thing and pack it in. While he could get Jimmy Cayne about things and get it over in a matter of weeks, Vikram is smarter than that and realizes that at the end of this folly, there’ll be more loot in it for Vickie if he can’t be held directly accountable for the bank’s failure. Which is why he and the brain trust came up with the initiatives above, along with “no more computers,” “no more for pay market data,” “no new Blackberries,” “no food,” “no fun,” in an effort to get all of Citi’s employees to quit (let’s be honest– they’re not in it for the prestige). Then VP will shrug his shoulders and make a face as if to say, “Well I did everything I could,” board the place up, and finally take over the role he tells friends and family he was born to play: Morgan Stanley CEO. (More on his plans for John Mack later.)
Citigroup Limits Meetings, Pares Color Photo Copies [Bloomberg]
In Trimming Expenses, Citi Holds Back on Color Copying [Dealbook]
*Not unlike “Non Client Travel.” To wit: “We previously asked that non-client travel be limited to trips which are truly essential. However, it seems that we are not consistently adhering to that policy. Going forward, all non-client travel will require pre-approval. As an alternative to non-client travel, I encourage you to make use of our audio and video conference capabilities.”

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Comments (40)

  1. Posted by guest | August 26, 2008 at 11:48 AM

    “the sad trombone that plays on loop in the lobby.”
    omg. if clever lines were breasts…

  2. Posted by guest | August 26, 2008 at 11:50 AM

    Spread a little Mayo on Citi, and they will look as good as new.

  3. Posted by guest | August 26, 2008 at 11:51 AM

    color copier have much liquidation value?

  4. Posted by guest | August 26, 2008 at 11:51 AM

    color copier have much liquidation value?

  5. Posted by guest | August 26, 2008 at 11:52 AM

    ..but on all other counts, the piece reads like a slow-news-day-highly-caffienated conspiracy rant.

  6. Posted by guest | August 26, 2008 at 11:55 AM

    @5– kill yourself.

  7. Posted by finance_baller | August 26, 2008 at 11:56 AM

    Already read this on BB, no copy of memo?

  8. Posted by guest | August 26, 2008 at 11:58 AM

    @7– see the dealbook link. Or i’ll copy and paste it for you:
    From: Office of John Havens
    Sent: Friday, August 15, 2008 4:41 PM
    Subject: New Expense Policies and Procedures
    Memorandum
    Date: August 15, 2008
    To: ICG Employees
    From: John Havens
    Cc: ICG Management Committee
    Re: New Expense Policies and Procedures
    Improving our cost structure and creating operating leverage in our business is an important part of our strategy for the Institutional Clients Group. The same effort and innovation that we apply toward building our business and growing our revenue must also be applied to creating a highly efficient and scalable cost structure.
    As you know, we have spent considerable time looking at our headcount and related expense, and while we have made progress in that area, we still have more work to do. I recognize that the work around headcount has been challenging, and I appreciate all of your efforts.
    It is equally important that we ensure that every dollar that we spend on third party goods and services is highly efficient. I ask each of you to carefully consider every expense that you incur and ensure that it is both necessary and in accordance with our policies.
    To that end, I want to let you know about several new and important expense policies and pre-approval procedures which take effect immediately. These policies and procedures apply to all ICG employees and the functional support areas dedicated to ICG, in all regions.
    Managing our expenses is not only a critical aspect of our strategy, it is also an important part of our jobs. Each of us must do our part to manage our expenses by challenging every dollar we spend to ensure that it is truly necessary and in compliance with our policies. The Management Committee and I expect everyone’s full support for this important effort.
    Thank you.
    -JPH
    I. Expense Policies
    Technology Related Purchases – As a general matter, our existing inventory of hardware and software is adequate to meet our operating needs. While
    we fully intend to continue making strategic investments in technology to enhance our capabilities and competitiveness, we must not waste our available technology resources on the purchase of unnecessary hardware or software. As a result, all new purchases of hardware (e.g. PC’s, laptops, printers, peripherals, etc.), software or any technology services will require pre-approval, and only those purchases that can be demonstrated to be absolutely critical will be approved.
    Market Data – Over the coming months, we will conduct a comprehensive review of our market data services and related usage. Early analysis suggests that the level of market data services within ICG is above industry best practices. Therefore, I ask each of you who use market data to carefully review all the services you currently consume and cancel any services which are not absolutely necessary to perform your duties. Going forward, all new market data services will require pre-approval.
    Blackberry Usage – We will also be conducting a review of our blackberry usage. In the interim, all new blackberries will require pre-approval. For any employee who is approved to have blackberry messaging, only one device will be eligible for reimbursement (i.e. no additional pager). A separate pre-approval will also be required to have the blackberry phone enabled. For any employee who is approved for reimbursement of a blackberry phone, that phone will be the only device for which reimbursement is permitted, and only necessary business related calls will be reimbursed.
    Office Space, Moves and Furniture – Real estate represents a significant share of the expenses of ICG. Going forward, all requests for new office space, office relocations and/or expansions and lease renewals will require pre-approval. Additionally, office and workstation moves and furniture purchases will be limited to only those which are truly essential and will also require pre-approval.
    Color Copying and Color Printing – The use of color copying and printing dramatically increases our copying and printing costs. Color presentations are unnecessary for internal purposes; therefore going forward color copying and printing should only be used for client presentations. Also whenever possible, presentations should be printed double sided to reduce unnecessary paper usage. Over time, we will be removing color copiers and printers from the locations where they are not essential for purposes of preparing client presentations.
    Non-Client Travel and Entertainment:
    Non- Client Travel – We previously asked that non-client travel be limited to trips which are truly essential. However, it seems that we are not consistently adhering to that policy. Going forward, all non-client travel will require pre-approval. As an alternative to non-client travel, I encourage you to make use of our audio and video conference capabilities.
    Non-Client Offsite Meetings – We will no longer be holding “offsite” meetings for internal purposes. All internal meetings must be held in one of our conference facilities, in the location that has the greatest number of attendees or via audio or video conference.
    Non-Client Corporate Events – In accordance with our existing policy, employees will not be reimbursed for non-client outings, summer parties or similar events. As we get closer to the winter holiday season, we will communicate with you regarding specific guidelines for holiday events.
    Late Night Car Service and Meals – Each of our locations has specific policies regarding the use and reimbursement of car services and meals for employees who are required to work late. Here too it appears as though we are not fully following our policies. Going forward, it is our expectation that we will all strictly adhere to our car service and meal policies and only those expenses which are in compliance with policy will be reimbursed.
    Non-Client Entertainment and Meals – Except with respect to employees who are traveling for business, we will no longer reimburse without pre approval any expenses for internal entertainment or meals with colleagues.
    Training and Industry Conferences – The vast majority of training required to perform your job is available to you through our online training resources. As a result, external training will be limited to only that which is strictly necessary, such as that which is required for regulatory or compliance purposes. No travel expense should be incurred in connection with any external training. All external training and/or attendance at an industry conference will also now require pre-approval.
    Client Events – We need to carefully evaluate our spending on client events and ensure that they are good investments of our limited resources. We will be working with the heads of each business to review all currently scheduled client events, including the list of proposed attendees (both client and employee) and total cost of the event (including any travel and client entertainment contemplated as part of the event). Going forward, all new client events will require pre-approval and any client event with an expected cost of $5,000 or more must be arranged through the Global Event Marketing department.
    Temporary Employees, Contractors and Systems Consultants – We currently employ a very substantial temporary workforce. We will be conducting a detailed review of all of our temporary workforce engagements to understand more efficient ways to fulfill our needs. In the interim, all new temporary employees, contractors and systems consultants, as well as the replacement or extension of any such staff currently on board beyond the scheduled end of their current assignments will require pre-approval.
    Management Consultants – Our current usage of management consultants is too high. Management consultants should only be engaged for those limited instances where a specific expertise which does not reside within our organization is absolutely required. We will be reviewing our existing engagements of management consultants to determine if there are more efficient sources to fill our needs. Going forward, all new management consulting engagements will require pre-approval.
    Recruiting – The use of external recruiters will now require pre-approval. I am confident that we can be successful in satisfying the vast majority of our hiring needs through the use of low and no fee sources (for example job boards, employee referrals, etc.).
    Professional Memberships – Reimbursement for membership in professional associations is limited to one per employee and only for memberships that are required for the performance of your duties and which have been pre-approved.
    Purchasing & Procurement Services – Citi Procurement Services has established specific procedures for the purchase of all of our third party supplies, materials and services. These procedures must be followed in all cases. In addition, I remind you that none of us is authorized to contract on our own for any third party goods or services. All such contracts must be entered into through Citi Procurement Services.
    II. New Pre-Approval Procedures:
    The written pre-approval of Mark Rufeh, our Chief Administrative Officer, will now be required for all:
    Technology Equipment and Services (Hardware, Software, etc).
    Market Data Services
    Blackberries and Wireless Devices
    Office Space, Moves and Furniture
    Temporary Employees, Contractors, Systems Consultants
    Management Consultants
    The written pre-approval of the respective ICG Management Committee Member for your business will be required for all:
    Non-Client Travel
    Training/Industry Conferences
    Professional Memberships
    Internal Entertainment
    Corporate Events Over $2,500 (or the local equivalent spend)
    The approval of Bruce Cohen or Diane Arber, our Senior Human Resources Officers, will be required for all Contingent Searches.
    The approval of Hamid Biglari, our Chief Operating Officer, will also be required for all Retained Searches and Corporate Events over $10,000 or the local equivalent spend.

  9. Posted by guest | August 26, 2008 at 11:59 AM

    “finance baller”– really? you read the reasoning behind the cost cutting on bb?

  10. Posted by guest | August 26, 2008 at 12:00 PM

    Citi went full retard…you never go full retard

  11. Posted by guest | August 26, 2008 at 12:09 PM

    Get rid of Robert Rubin for starters. Can someone please explain to me (in non-mayo parlance) exactly what he does?

  12. Posted by Anal_yst | August 26, 2008 at 12:10 PM

    Guess all the other groups besides ICG still have carte blanche though, eh?

  13. Posted by Anal_yst | August 26, 2008 at 12:10 PM

    Guess all the other groups besides ICG still have carte blanche though, eh?

  14. Posted by guest | August 26, 2008 at 12:11 PM

    Actually the thing is beautiful. Someone forward this to the ‘class warriors’ who claim that corporations are simply ripping money off of everyone else.
    If you follow the number of different industries/folks who will be affected if lets say Citi were to not exist, it is quite clear that corporations are providing a livelihood to millions of people in diverse areas. You could create a similar supply chain for any corp, including the much reviled Exxon.

  15. Posted by a dead horse | August 26, 2008 at 12:12 PM

    I know you’re kidding about no computers, but Citi is actually getting rid of PCs and moving to a “thin-client” model. Nobody has PCs or laptops anymore, they get thin-client boxes that access everything from a server.

  16. Posted by guest | August 26, 2008 at 12:13 PM

    @15– no, read the memo…it’s an exaggeration but still kind of the gist.

  17. Posted by guest | August 26, 2008 at 12:15 PM

    10 — awesome

  18. Posted by guest | August 26, 2008 at 12:19 PM

    shades of Sandy Weill

  19. Posted by HAM05 | August 26, 2008 at 12:20 PM

    aw youyouyou huhuhurt mememy feeelings

  20. Posted by guest | August 26, 2008 at 12:25 PM

    @11 I think they got rid of Rubin’s pay yesterday. I could be mistaken but I heard something on CNBC yesterday about his comp.

  21. Posted by guest | August 26, 2008 at 12:31 PM

    Well played #10…!! Saw the movie last week. Well played sir!!

  22. Posted by guest | August 26, 2008 at 12:34 PM

    This is all laughing stock turf, here. Sure, just go ahead and stomp on those last few embers of morale you have left at the place. They should just be wholesale cutting the bureaucracy there, make a big cut of all non-revenue-producing positions, and see what the fallout is. What’s killing these places is the trying to strategically leave “protected” areas less deeply cut, in case business bounds back.

  23. Posted by FUNdamental | August 26, 2008 at 12:39 PM

    citi employees count your blessings…over at LEH they have mandatory use of both sides of a thinner paper.

  24. Posted by guest | August 26, 2008 at 12:43 PM

    If they can keep the titty bar tabs under $5,000 it sounds like theey’re home free.

  25. Posted by guest | August 26, 2008 at 1:03 PM

    Thank the man upstairs I don’t work at CitiDump (or ShittyGroup, or CitiCrap whatever its called now-a-days)anymore. It was my first job out of school and I would have been better off patrolling the campus parking lot.

  26. Posted by guest | August 26, 2008 at 1:04 PM

    Why is Vik “waiting for people to quit”? Why doesn’t he just fire a few? That would easily make up for color copies and that “both sides of the paper” numbness.
    The Guy from Delaware

  27. Posted by guest | August 26, 2008 at 1:11 PM

    @ 6 i’d rather meet you at the trendy bar you spend your daddy’s money at and mop the floor with silk-shirted panzy ass.

  28. Posted by guest | August 26, 2008 at 1:11 PM

    @26 why arent you making white sauce with your right hand now?

  29. Posted by guest | August 26, 2008 at 1:12 PM

    that’s *your* silk-shirted panzy ass.

  30. Posted by guest | August 26, 2008 at 1:35 PM

    @ 23
    I believe citi also has this policy in place. Thats not the sort of thing you send out a mass e-mail about so they hired Larry Craig to sit in the next stall and tap his foot to remind you to flip it over.

  31. Posted by a dead horse | August 26, 2008 at 1:47 PM

    @16
    No, read the post – this is independent of what is going on in ICG

  32. Posted by DS | August 26, 2008 at 1:59 PM

    @14 – Well said.

  33. Posted by guest | August 26, 2008 at 2:07 PM

    14 Yeah, most of whom are illegals. (Fetching food, driving black cars, cleaning up, making beds in hotel rooms).

  34. Posted by guest | August 26, 2008 at 2:09 PM

    Coal burns. Coal is momentary and coal is costly.
    There will be no more coal burned in this office today, is that quite clear, Mr. Cratchit?

  35. Posted by DS | August 26, 2008 at 2:12 PM

    @14 – Well said.

  36. Posted by guest | August 26, 2008 at 2:39 PM

    When they start mandating the reuse of the coffee filters and switch to the scratchy TP in the executive lavatories, then you know they’re really in trouble.

  37. Posted by guest | August 26, 2008 at 3:22 PM

    @20 Per today’s Journal, sounds like Rubin is still doing the same crap he was [not] doing, with a different title. He goes from Chief Doo Little to Senior Counselor – whatever that is? Probably changed his title so they don’t have to disclose how much they’re really paying this schmuck.

  38. Posted by arthurcutten | August 26, 2008 at 3:31 PM

    Perhaps Citi needs the coin to pay the fine for the charges of widespread theft of customer funds?
    http://jessescrossroadscafe.blogspot.com/2008/08/citigroup-settles-charges-of-theft-of.html

  39. Posted by guest | August 26, 2008 at 8:06 PM

    You’ve got Indian as Count Dracula CEO.It’s typical Indian way who are thrifty by nature.Indian sucks!

  40. Posted by guest | August 27, 2008 at 12:11 AM

    All the “savings” by this policy is going to amount to chump change. They’ll saddle management with the chore of “pre-approving” relatively minor purchases and burn up employees’ time with endless meetings about whether this expenditure is justified or that expenditure is justified. In time, the higher level people will get sick of spending their time on petty crap and delegate it to more junior people, and eventually the decision-making on color copiers will fall back to the level it belongs.
    And someone will eventually note that it’s hard to differentiate between six shades of gray on a bar chart.