Citigroup Inc's CitiFinancial unit will shut 330 of its U.S. branches and cut between 500 and 600 jobs, in an effort to cut costs at the business and make it more attractive to potential buyers.
Citigroup said on Tuesday that it would shut about 18 percent of CitiFinancial's 1,833 U.S. branches and stop making loans at another 182 branches.
The decision to close or stop making loans at the various branches depends on consumer demand and regional economies, Mary McDowell, the Baltimore, Maryland unit's chief executive officer, said in an interview on Tuesday.
A lot of potential buyers like to see a business that has future growth potential; and as the economy has changed over the last couple of years, we are not lending as much as we were, she said. If you spread the customers over all the branches that we had, while you can grow the business, it's very hard to grow the individual branch.
After the reorganization, which will be effective July 1, CitiFinancial will no longer operate full-service branches in Connecticut, Nevada and Rhode Island. It will retain loan-servicing centers in those states.
Citigroup will also rename CitiFinancial by the end of the year, but McDowell said the company has not yet decided on a new moniker.
In March, Citigroup agreed to pay a $1.25 million fine to settle allegations by 35 U.S. states that CitiFinancial failed to report 91,127 residential mortgage loans to the federal government as required by law.
McDowell said Citigroup's decision to reorganize CitiFinancial was not at all related to the settlement.
CitiFinancial was previously known as Commercial Credit, the Baltimore-based lender that Sanford Sandy Weill bought in 1986 and made part of the foundation of what is now Citigroup.
CitiFinancial is now among the businesses that Citigroup is hoping to sell or wind down.
Citigroup shares were down 1.5 percent at $3.90 in late-afternoon trading on Tuesday.
(Reporting by Maria Aspan, editing by Gerald E. McCormick)