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Citigroup axes another 50,000 jobs
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Citigroup is to slash 50,000 more jobs and cut costs by as much as 20% as the deepening global economic crisis continues to cripple the world's biggest banking group.

Vikram Pandit, the Citigroup chief executive, announced the fresh round of job cost cuts at a "town hall meeting" of employees.

The bank, which has 12,000 employees in the UK many of whom are based at its Canary Wharf headquarters in London, has already axed more than 23,000 jobs this year in an attempt to offset massive losses from the sub-prime mortgage crisis and the credit crunch.

Citigroup has lost more than $20bn (£13bn) in the past year as it was heavily involved in buying and selling complex mortgage-backed securities, which became worthless as the bottom fell out of the US housing market.

This latest round of cuts is much deeper than most analysts had predicted and marks Pandit's boldest move yet to arrest Citigroup's rapidly plunging share price.

Last week Citi's shares sank into single digits for the first time since Sanford "Sandy" Weill created the banking giant from the merger of his Travelers Group insurance company and Citicorp in 1998.

The shares were off almost 2% at $9.34 before the market opened on Wall Street today. Citigroup stock has fallen 68% this year, however, giving the banking group a market value of only $51.9bn.

Pandit has come under intense pressure since the decline began and analysts believe he will face an even louder chorus of investor dissatisfaction if this latest plan fails to turn the share price around.

He has already been forced to take some $25bn of bail-out cash from the US Treasury to keep operations afloat but the cash injection has done little to help the bank's ailing fortunes.

Pandit revealed the massive job and cost cuts in a 25-page Powerpoint presentation posted on the bank's website . The job cuts are detailed on page 17 in a section subtitled "Getting Fit - Fast!".

The chart shows Citigroup employed 375,000 worldwide in the fourth quarter of 2007 and wants to reduce that number to 300,000 in the short term.

The chart also shows that Citigroup's operating expenses were running at $62bn in the third quarter of this year but that Pandit wants to reduce the overhead to $50-52bn – a reduction of 16-19% – by 2009.

Most of the jobs are going to come through a painful round of layoffs with no corner of the banking group expected to be spared. Sources close to the group said as many as 15% to 20% of Citi's UK employees could face the axe although the bank declined to comment.

The cost cuts are expected to come through more divestments and the closure of certain regional centres, the source added.

The bank has already raised more than $9bn selling off various divisions such as the $7bn sale of its German retail banking operations.

Citigroup is not alone in cutting jobs and costs as the economic crisis worsens. Banks and brokerages worldwide have shed almost 160,000 in the past year and more are likely to come.

by James Doran in New York

Source > 
Guardian | nov 17

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