Citigroup Sees Integration Results and Announces Restructuring Charge, with $975 Million in Annual Operating Efficiencies Expected by Year 2000.

NEW YORK--(BUSINESS WIRE)--Dec. 15, 1998--Citigroup Inc. (NYSE:C) announced today that its Board of Directors approved a restructuring charge of approximately $900 million after tax, the bulk of which will be recorded in the fourth quarter of 1998.

This reflects the considerable progress in bringing Citigroup together as an integrated business and achieving efficiencies throughout its global operations.

"This is an important step in assuring that the company's performance in 1999 and beyond is in line with the promise of the merger," said John S. Reed and Sanford I. Weill, Chairmen and Co-Chief Executive Officers of Citigroup.

As a result of these integration efforts, the company expects to achieve pretax expense savings of approximately $680 million in 1999 and targets annual run rate expense savings of approximately $975 million pretax in 2000.

"Since the formation of Citigroup on October 8, we have worked hard to achieve the potential of our merger. We can now begin to see the results of those efforts. The efficiencies that come from integrating and improving our businesses will enhance our service to our customers and will provide a strong base for achieving our profit goals for 1999," Messrs. Weill and Reed said. "While market upheavals might obscure the impact of some of our revenue-enhancing actions in the short-term, the operating efficiencies we have identified will help us continue to build shareholder value and provide a stronger global platform for growth, consistent with market opportunities and realities. We expect savings will also fund investments in high growth areas on an ongoing basis, thereby accelerating our top-line progress over time."

Efficiencies will be realized through actions in all businesses and geographic regions. Approximately $525 million of the total targeted improvements will result from Consumer business initiatives. These include regional consolidation of call centers and other back office functions worldwide, reduction of management layers, sales force restructuring and integration of overlapping marketing and product management groups. The Consumer business also expects to improve results by exiting several non-strategic operations. Besides improvements directly related to the restructuring charge, the Consumer business anticipates additional savings from more tightly managing non-customer expenses such as outside consultants and travel.

As these actions take place, the Consumer business continues to invest in new technology, promising business ventures, broad-based marketing and advertising and cross-selling pilots. For example, Citibank is adding approximately 700 positions in U.S. credit card telemarketing, where new customer segmentations and direct marketing initiatives are showing significant potential. It is also expanding to leverage the success of its CitiGold effort on a worldwide basis and has begun offering Travelers Life & Annuity annuities and Salomon Smith Barney Asset Management mutual funds in its North American branches. Commercial Credit has assigned a 60-person team to identify Citibank cardholders who could benefit from home equity loans and other debt consolidation services. Travelers Property Casualty has already sold approximately 3,000 auto and homeowners insurance policies through the call centers servicing Citibank's card operations. Primerica has opened some 1,000 new Citibank checking accounts through pilot cross-marketing programs in Atlanta and Las Vegas. Salomon Smith Barney brokerage clients interested in mortgage financing are now being referred to Citibank's mortgage operations.

Approximately $350 million of the efficiency improvements will be achieved in the Corporate business, both to realize synergies and operating efficiencies and to reflect market turmoil in certain regions and businesses. These savings will come from all areas of the Corporate business, including emerging markets, global relationship banking and investment banking, as the company rationalizes its presence in countries with multiple operations, consolidates Citibank and Salomon Smith Barney locations, integrates trading platforms and exits non-strategic businesses. Cross-marketing between Citibank corporate bankers and Salomon Smith Barney investment bankers has already yielded more than 100 opportunities which would not have been open to either operation on its own, from issuance and custody of yen-denominated debt instruments for an executive incentive program, to co-managing one of the year's largest IPOs, and to advising on and providing short-term financing for a Latin American privatization.

Approximately $15 million of the improvements relate to efficiencies to be realized in Asset Management operations, mostly through the elimination of redundancies.

The remaining approximately $85 million of the total targeted savings will be achieved by streamlining and integrating staff functions.

Expected savings from previously announced programs of $300 million pretax at Salomon Smith Barney and $750 million pretax at Citicorp are not included in the new $975 million in targeted improvements. These savings also do not include potential cost reductions from consolidation of the company's locations in New York and London. The optimal configuration for its Corporate business facilities in London will be determined over time. The company is presently reviewing options with respect to its New York operations, the final determination of which could result in an adjustment of previously announced charges taken in conjunction with the merger of Smith Barney and Salomon Inc.

The integration of the company's activities will result in a workforce reduction, net of anticipated rehires to fill relocated positions, of approximately 10,400 positions, or 6%, worldwide. The largest portion of these reductions will come from the Consumer business. Approximately 35% of the global reductions will be in the United States.

Citigroup, which was formed by the merger of Citicorp and Travelers Group Inc., provides a broad array of financial products and services to 100 million consumer and corporate customers through operations in 100 countries. Among its businesses are Citibank, Commercial Credit, Primerica, Salomon Smith Barney, SSB Citi Asset Management Group, Travelers Life & Annuity and Travelers Property Casualty.