TOPICS > Economy

Citigroup Plans to Slash Another 50,000 Jobs

BY Admin  November 17, 2008 at 1:50 PM EDT

Citigroup branch in New York; AP photo

The workforce is being reduced
by 20 percent from the company’s peak of 375,000 at the end of 2007. In
October, Citi announced that it was eliminating about 22,000 jobs from that
level. The total workforce reductions include thousands of jobs that will be
lost when Citigroup completes the sale of Citi Global Services and its German
retail banking business, the Associated Press reported.

CEO Vikram Pandit discussed
the plans, which were posted on the company’s Web site, at a town hall meeting
with employees in New York.
In the meeting, bank executives also said they want to shore up the bank’s
capital base, cut risky positions and trim expenses by 16 percent to 19 percent
to about $50 billion in 2009, according to the New York Times.

Shortly before the town
hall meeting in New York, Citigroup Chairman
Win Bischoff said at a business forum in Dubai,
United Arab Emirates,
that it would be irresponsible for Citi and other companies not to look at
staffing in the event of a prolonged economic downturn.

“What all of us
have done — and perhaps injudiciously — we’ve added a lot of people over …
this very benign period,” Bischoff said.

“If there is a
reversion to the mean … those job losses will obviously fall particularly
heavily on the financial sector,” he added. “Certainly they will fall
particularly heavily on London and New York.”

A Citigroup spokesman
said that while certain regions and businesses might have higher concentrations
of job cuts, they would generally be across the entire company and around the
world.

In his comments to the
Associated Press, Bischoff did not rule out the likelihood that Citi’s leaders
would go without bonuses this year — a move that would effectively amount to a
substantial pay cut for the company’s executives.

“Watch this
space,” he said when asked about lost bonuses.

On Sunday, Goldman
Sachs Group Inc. said seven top executives, including Chief Executive Lloyd
Blankfein, opted out of receiving cash or stock bonuses for 2008 amid the
ongoing credit crisis.

Citi shares fell in
early-morning trading, but recovered most of the loss by midday. The company’s
shares have been trading at 13-year lows.

This week, the
second-largest U.S. bank’s shares fell below $10 for the first time since
Sanford “Sandy” Weill in 1998 created Citigroup from the merger of
Travelers Group Inc with Citicorp.

Citigroup is
constrained from growing at home, and Wells Fargo & Co. last month derailed
its attempt to buy Wachovia Corp and its $418.8 billion of deposits. Its market
value is only about $52 billion, barely twice the $25 billion of capital it
received from the U.S. Treasury Department’s new bank bailout plan.

Citigroup has lost
$20.3 billion in the last year, analysts expect it to lose money this quarter,
and some analysts believe it may not be profitable in 2009.

The bank was cobbled
together principally by Weill, who ceded control to Prince in 2003. But
analysts believe Citigroup never invested enough in technology or to make the
bank’s disparate parts work well together.

And Citigroup’s
geographic diversity, including operations in more than 100 countries, is by
some measures now a negative, as customers in Brazil, India and Mexico — like
many in the United States — find it harder to keep up with their bills.

Most of Citi’s job
reductions would come through attrition or the sale of units, the bank said,
meaning the actual number of layoffs could be less. The cuts would leave the
bank with about 300,000 employees.

Citigroup has reported
four consecutive quarterly losses, including in $2.8 billion in the third
quarter.

Investment bankers are
expected to bear the brunt of the losses at Citigroup because senior managers
have been asked to reduce expenses significantly. But back-office functions,
such as the bank’s legal and human resources divisions, are also expected to be
hard hit.

Monday’s announcement
is only the latest bad news from a financial firm. Wall Street firms have
announced more than 150,000 job cuts worldwide, but it could take months for
the losses to show up in payroll data because workers still appear employed
while they receive severance.