Published: Monday November 24, 2008
Shares in Citigroup, one of the biggest banks in the US, plunged on Friday amid uncertainty about the firm's future.
The firm’s stock rose in early trade but later tumbled 28 per cent as investors awaited the outcome of a meeting of the firm’s board members.
The Wall Street Journal reported that Citigroup was considering selling parts of the firm. There are also rumours it might merge with another firm.
Earlier in the week the firm announced 52,000 job losses worldwide.
These cuts came on top of previously announced reductions of 23,000 positions.
The total 75,000 job cuts represent a cut of about 20 per cent of its staff, leaving it with 300,000 jobs worldwide "in the near term.”
Chief executive Vikram Pundit told employees on Friday that the firm did not want to change its business model, Reuters reported, citing two employees.
Shares in the firm have fallen sharply since the start of the year and are trading more than 80 per cent down since January.
Saudi Prince Al-Waleed Bin Talal's decision to buy about US$350 million of its shares on Thursday did not calm investors' nerves.
The firm insisted on Thursday that it had “very strong capital and liquidity position and a unique global franchise.”
But Pandit has come under increasing pressure from critics who doubt his ability to turn around the company and survive the financial crisis.
Citigroup has lost more than US$20 billion in the past year because of the global financial crisis.
The bank has reported four straight quarterly losses and some analysts believe it will not return to profitability until 2010.
Investors are worried that further losses could threaten the bank’s future.
“Its fear and panic at this point,” said Gerard Cassidy, a banking analyst at RBC Capital.
Source: Trinidad Guardian Newspapers