Baltimore-based CitiFinancial, the consumer lending arm of financial giant Citigroup Inc., said Tuesday that it plans to close 330 branches across the U.S., including six in Maryland, as it reorganizes its business and continues to look for a buyer.
The move will result in 500 to 600 job cuts, though it's not known how many employees will be affected in Maryland, according to CitiFinancial.
Citigroup has been trying to sell CitiFinancial and other distressed assets since last year amid the financial crisis. But finding interested buyers has been tough with CitiFinancial generating a large percentage of Citigroup's loan losses, said Shannon Stemm, a financial services analyst at Edward Jones & Co. in St. Louis.
"In this case, they're trying to cut costs and streamline their business to make it more attractive for a sale," Stemm said.
As part of the reorganization, the company plans to create a new network of branches called CitiFinancial Servicing that will focus on helping existing customers in areas such as loan modifications and restructurings. The company will convert 182 existing branches across 48 states into the new concept.
Of the 33 branches in Maryland, CitiFinancial will close six branches while converting three into the new servicing offices, Mary McDowell, CitiFinancial's chief executive, said in an interview. She said the reorganization will create job opportunities for workers who could be laid off.
"CitiFinancial Servicing allows us to really focus a lot more fully on specialized servicing, expand hours, create larger centers in most cases and provide additional focus on customers," McDowell said.
The branch closures are "in line with demand we've seen from customers and changes in the economy over the past couple of years," she added.
The reorganization will not affect CitiFinancial's downtown headquarters on St. Paul Place, where there are about 850 workers, said McDowell. Another 135 employees work in branches in Maryland.
"It's purely a branch network reorganization," she said. "We remain a big employer in Baltimore and in Maryland."
After the restructuring, CitiFinancial plans to rename its business. The rebranding will be announced by the end of the year, the company said.
CitiFinancial makes home equity loans, auto loans and personal "debt consolidation" loans. It has 1,833 offices and 9,600 workers in the U.S.
CitiFinancial is the successor to Commercial Credit Corp. in Baltimore, which Citi patriarch Sanford I. "Sandy" Weill acquired in 1986 as the first step toward his goal of creating a company that would serve all financial needs of individual and business customers. Through a series of mergers, Commercial Credit turned into the Travelers Group, which in turn merged with the old Citicorp in 1998 to form Citigroup.
In 2009, Citigroup split itself into two businesses, separating its noncore businesses such as CitiFinancial from its global, corporate and investment banking services. Citigroup has been marketing CitiFinancial and other noncore assets for sale since then.
"We have been looking for a buyer we think will continue the strong, great tradition of CitiFinancial," McDowell said.