GWEN IFILL: The nation's third largest bank, Citigroup, announced big job cuts as it continues to scale back in the wake of the financial crisis. The 11,000 employees to be laid off worldwide make up about 4 percent of the company's work force. More than 6,000 of those jobs are in consumer banking.
The move comes less than two months since a shakeup at Citi, ousting former CEO Vikram Pandit. He was succeeded by Michael Corbat. The bank nearly collapsed during the crisis and ultimately received bailouts totaling $45 billion, money that Citi has since repaid.
Roben Farzad has long watched the changes at Citi for Bloomberg BusinessWeek and he joins us again tonight.
Today, we heard that stocks soared on the news of these layoffs. What does that tell us about what was going on at Citi?
ROBEN FARZAD, "Bloomberg BusinessWeek": It's sad, actually.
Citigroup is -- you could say that the financial crisis is rather over, but it's in the throes of an existential crisis.
It doesn't know what it wants to be. And investors have been clamoring for a while for Citigroup to simplify, to shed payrolls, to be good at something. It does everything, but it isn't market-leading, necessarily, in any one category.
And, by and large, they got the layoffs, at least the beginning round of layoffs that they wanted today.
GWEN IFILL: Now, we know that many of these layoffs are not in the U.S., but I assume that part of the reason why these stocks went up is because people thought that Citigroup was too fat and needed this cutting.
ROBEN FARZAD: Yes.
Citigroup, it peaked in size at about 375,000 employees at the beginning of 2008. And it's now closer to 260,000 employees. So it has -- it has let go of a lot of people, to be sure.
But it's still a massive, hulking institution, and it's the product of, really, a strategy of the past 15 years of rolling up banks, buying up assets on the ground in far-flung emerging markets.
It's all over the world. It's in Colombia. It's in Pakistan. And that really was the imprimatur that the recently sacked CEO, Vikram Pandit, inherited, and he thought it was actually the strongest suit of the bank was its presence in emerging markets.
The new CEO, Michael Corbat, has come here and said, we're just too big. We're just too all over the place. We're too sprawling for any focus, and we're going to have to pull back, frankly, in places like Pakistan and Romania, probably in roots to other cuts.
GWEN IFILL: So the new CEO is making this step as a signal as much as resetting, recalibration on direction for the bank?
ROBEN FARZAD: That's true.
You can only expect it from a new CEO who comes in really at the board's behest with a new pair of cold eyes.
And, obviously, what Citigroup is in its current iteration is not working, not for the bank. It's not efficiently turning out profits the way its competitors like Wells Fargo, and J.P. Morgan, who have eclipsed it, have been doing after the great bailout of 2008.
You saw the CEO pushed out by the board and you saw the new CEO come in and given a mandate to effectively turn this massive supertanker around.
GWEN IFILL: You mentioned that this was something which a lot of people saw coming. It makes me think that maybe this is a first step. Are there more layoffs to come?
ROBEN FARZAD: This has been going on writ large across Wall Street actually since the beginning of 2011.
There have been north of 300,000 layoffs. You have seen it at UBS. You have seen it at Bank of America, which is struggling with its own acquisitions. You have even seen it at Goldman Sachs, which is arguably one of the big beneficiaries, one of the winners after the financial crisis.
It's actually -- if you talk to these bank CEOs, they will tell you it's a difficult time to run a multinational investment bank, even with the bailouts that they got, even with the Federal Reserve at interest rates of zero for four years, even when they offer you and me nothing on our savings and checking accounts.
They say, in their own defense, we're dealing with unprecedented regulation. We have to curb proprietary trading. We have regulators breathing down our neck and it's hard to earn an extra buck in that environment.
So, you're seeing Citi, in fact, address those concerns in its layoff announcement today.
GWEN IFILL: What does that tell about the health of the overall banking sector and whether other big banking institutions might be following suit?
ROBEN FARZAD: Citigroup is not as much an indicator species as I think people would want it to be.
In the past, it was. Let's not forget, this was, 15 years ago, the financial supermarket. It rolled everything together. It's one-stop shopping. And that model has been called into question, not least by the architect of this model, Sanford Weill, Sandy Weill, who gave an interview this summer saying that we should break up the big banks.
Gwen, I think it tells us more about the end of the era of kind of this forced conglomeration of banks, where's bigger is naturally better. You have seen, obviously, too-big-to-fail banks become even too bigger to fail, such as J.P. Morgan or Wells Fargo, which bought Wachovia.
But there are others out there who find that they just can't hit their stride with the assets that they say accumulated a decade ago, Citigroup and Bank of America being two notable examples.
GWEN IFILL: So, Citi is -- what happened here -- or watching to happen at Citigroup, does that make them an outlier or are they a sign of things to come?
ROBEN FARZAD: I think it's a little bit of both.
Citigroup, let's not forget, had to go in for two rounds of bailout money. There was even some scuttlebutt that the White House suggested that this was a bank that should fail, that it was beyond rescue.
It still has $170 billion of bad assets on its sheets that it's looking to get rid of. There are no easy answers for it. There is no overnight turnaround.
But, at the same time, it's a public company, and shareholders are saying, show me the progress.
GWEN IFILL: Roben Farzad of Bloomberg BusinessWeek, thanks so much.
ROBEN FARZAD: Thank you, Gwen. Have a good night.