Citigroup is to cut more than 17,000 jobs and relocate a further 9,500 from high-cost areas, such as New York and London, to Asia and Latin America in a cost-cutting that will affect 26,000 workers.

More than 8 per cent of Citigroup’s workers face losing their jobs, although the total number of posts to go will equal about 5 per cent of the 327,000 global workforce. The world’s biggest bank was forced to cut costs by as much as $2 billion (£1 billion) a year as its expenses are growing faster than its revenues. Operating expenses soared 15 per cent last year to $52 billion, while revenue rose just 7 per cent.

The changes mark the first big restructuring since Citicorp and Travelers Group merged in 1998 to form Citigroup.

The radical overhaul was ordered by Prince Alwaleed Bin Talal, the Saudi investor and Citigroup’s biggest single shareholder and, once his concerns were made known, Charles Prince, the Citigroup chief executive, promoted Robert Druskin to chief operating officer and charged him with executing the programme.

The cuts will mainly hit back-office operations, the group said. Layers of management will be trimmed and some corporate offices closed. About 1,600 jobs will be lost in New York, where Citigroup has its HQ and several other large offices. Mr Prince said: “You will see a more efficient, more tightly managed and a more tough-minded Citigroup than you have seen in the past.”

Mr Druskin said that 43 per cent of the job cuts and 55 per cent of savings will be made in the United States. “We know where every head is coming from, we know where every dollar is coming from,” Mr Druskin added.

The bank will take a $1.38 billion pre-tax charge, or $871 million after taxes, in the first quarter, including about $1 billion for redundancy pay. It expects $200 million of additional pre-tax charges this year related to the cuts. Total pre-tax savings will be about $2.1 billion this year, $3.68 billion in 2008 and $4.58 billion in 2009.

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