Citigroup Cuts Banking Jobs, Layoff 50,000 Employees
New York City-based bank unveils massive layoff plan — the latest step by the embattled firm to slim down in response to the economic slowdown.Citigroup Inc revealed plans to cut 52,000 jobs by early next year in Chief Executive Vikram Pandit’s most dramatic move yet to restore profitability and bolster a sagging share price.The new cuts will leave the second-largest US bank with about 3 lakh jobs worldwide, down 20 per cent from the end of 2007 and roughly the same number it had at the end of 2005.
Cuts are expected from layoffs, the sale of units and attrition. Citigroup plans to slash expenses 20 per cent from peak levels and spend $50 billion to $52 billion in 2009.
That compares with $61.9 billion over the last four quarters.
The cuts, announced on Monday, will affect 15 per cent of Citigroup’s workforce and come on top of 23,000 jobs eliminated between January and September as souring economies and global credit conditions cause the US bank with the farthest reach worldwide to retrench.
Last week, Citigroup stock fell into the single digits for the first time since Sanford “Sandy” Weill created the bank in 1998 from the merger of Travelers Group Inc and Citicorp.
In an investor presentation on its Web site, the company said it would reduce its workforce to approximately 300,000 employees. As of the end of September, the New York City-based bank had about 352,000 employees.
This would be a 20% reduction in Citigroup’s staff from their peak levels late last year.
Roughly half of those jobs would come as a result of recent division sales, including the sale of the company’s German retail banking division. A Citigroup spokesperson said the remainder would touch all divisions of the company, both domestically and internationally.
Citigroup (C, Fortune 500) stock tumbled more than 6% in late morning trading on the New York Stock Exchange. In the last two weeks alone, shares have lost about a third of their value and so far this year, they are down about 68%.
Last month, the company lost a high-profile battle for struggling regional bank Wachovia (WB, Fortune 500). Citigroup had a government-brokered deal to buy Wachovia’s retail banking assets but Wachovia later agreed to a takeover offer for the entire company from the West Coast banking giant Wells Fargo (WFC, Fortune 500).
Some analysts have speculated that Citigroup may be looking to acquire another bank. But as the U.S. economy continues to slow down and more consumers lose their jobs, the bank will probably have to focus more on rising loan losses. Citigroup has set aside more than twice the amount of money it did a year ago to cover bad loans.
According to figures from outplacement firm Challenger, Gray & Christmas, Citigroup’s job cuts rank among the largest since Challenger began tracking layoffs in 1993. IBM announced job cuts of 60,000 workers in July 1993 while retailer Sears announced 50,000 job cuts in January 1993.
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