UPDATE 1-Citi profit drops as costs rise for employee severance, deposit insurance

Citigroup's profit fell in the first quarter as it spent more on severance payments for laid-off employees and set aside money to refill a government deposit insurance fund. Citi said in its investor presentation that it expects a headcount reduction of 7,000 and $1.5 billion in annualized savings from reorganization. Fraser began a sweeping reorganization in September to simplify the bank and improve performance.