Published: Tuesday November 18, 2008
Citigroup Inc is shedding approximately 50,000 more employees in the coming quarters as the banking giant struggles to steady itself after suffering massive losses from deteriorating debt.
The New York-based bank, which has already reduced its assets by about 20 per cent since the first quarter of the year, also plans to trim expenses by 19 per cent in 2009 from third-quarter levels to US$50 billion. The plans, posted on the company's website, were discussed by CEO Vikram Pandit at the company's town hall meeting in New York on Monday with employees.
The company said it is shrinking its workforce by 20 per cent from its 2007 peak of 375,000. The company had already announced in October that it was eliminating about 22,000 jobs from that level.
About half the expected workforce reductions will come from businesshttp://www.blogger.com/img/blank.gif sales; Citigroup already announced that it was selling Citi Global Services and its German retail banking business, accounting for about 18,000 jobs. Citi is planning to sell other businesses, too, but has not announced them yet, a spokesman said.
The other half of the workforce reductions will come from layoffs and attrition, the spokesman said.
The New York-based bank has posted four straight quarterly losses, including a loss of US$2.8 billion during the third quarter.
In an effort to instil confidence in the company, Citigroup emphasised in its presentation on Monday that its Tier 1 capital ratio, a measure of financial strength, is 10.4 per cent after a US$25-billion nvestment from the government - part of the US$700-billion financial rescue package passed by Congress last month.
That ratio is higher than peers, Bank of America Corp and Wells Fargo & Company, after their purchases of Merrill Lynch and Wachovia Corp, respectively.
Citigroup also stressed that it has doubled reserves in a year to US$24 billion; that its revenues are stable; and that Citigroup has lower exposure to US consumer mortgages than JPMorgan Chase & Co, Bank of America and Wells Fargo.
Share price falls
But the announcements were not met with enthusiasm from investors. Citi shares fell 46 cents, or 4.8 per cent, to US$9.06 in morning trading. The company's shares have been trading at 13-year lows.
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.
Source: Jamaica Gleaner