Page last updated at 09:19 GMT, Tuesday, 20 May 2008 10:19 UK

Citi move puts jobs under threat

Citigroup sign
Citigroup has been one of the worst hit during the sub-prime lending crisis

More than 600 jobs are at risk after Citigroup announced plans to close two of its UK lending arms.

One of the world's biggest banks is proposing to close mortgage supplier Future Mortgages and CitiFinancial, a personal loans business.

Some 400 employees at the Doxford office in Sunderland, and at least 270 in its UK branch network are being consulted about the plans.

US-based Citigroup has suffered huge losses owing to the sub-prime crisis.

Market share

Citigroup's UK consumer arm employs about 3,000 people and includes the Egg credit card business.

This move will undoubtedly have severe implications for those needing to borrow but who have less than perfect credit records
Tim Moss,

Future mortgages has 26,000 customers and less than a 1% share of the UK mortgage market. CitiFinancial has 66,000 customers with personal and homeowner loans.

"Future Mortgages and CitiFinancial were not identified as areas for strategic growth," said Bert Pijls, business manager for Citi's UK consumer business.

"We are committed to ensuring that staff who are potentially impacted by these proposals are treated fairly and made aware of all the options open to them."

Both businesses will stop lending to new customers on 21 May and existing loans would be managed elsewhere in the business under the proposals.

It plans to close the Sunderland site by mid-2009 at the earliest, with 49 branches set to close in the next few months.

'Severe implications'

Citigroup said earlier in May that it wanted to sell $400bn (205bn) of assets over the next three years as part of its bid to return to profit.

Citigroup logo
Citigroup's UK consumer arm employs about 3,000 people

It also announced 13,200 job cuts since the credit crisis struck.

Tim Moss, head of loans at price comparison website, said this and similar moves could push some borrowers towards debt rescue plans to get through the year.

"This move will undoubtedly have severe implications for those needing to borrow but who have less than perfect credit records," he said.

"Citi's core target audience is the near and sub-prime UK population, which is tipped to grow this year from eight million to ten million in the UK. With household bills rocketing, people who may have previously relied on Citi for loans could find themselves without anywhere to turn."

Ged Fitzgerald, Chief Executive of Sunderland City Council, said the news was "very disappointing" but Sunderland's economy continued to grow and was creating jobs faster than it was losing them.

"In common with London, New York and other financial centres around the world, Sunderland is not immune from the global financial crisis," he said.

"We will be talking to CitiFinancial to see whether we can offer support to those affected, be it in terms of looking for new employment or retraining."

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