NEW YORK: Vikram Pandit-led financial services giant Citigroup has said that it will cut more than 52,000 jobs in the coming months and reduce expenses by 20 per cent in 2009. ( Watch )
Citi said it intends to reduce the total head count to less than 3,00,000 in the near term as part of the plan. The financial services behemoth had a workforce of 3,52,000 in the third quarter of 2008.
"The head count is expected to be down 20 per cent in the near term from peak levels," the company said today.
Aiming to have less than 3,00,000 people, Citi would have to cut over 52,000 jobs.
The plans to be discussed in the meeting with Citi staff in New York today are posted as a power point presentation on the company's website.
The firm, which has been severely battered by the financial crisis, has incurred huge losses in recent quarters. In the third quarter, Citi had a loss of USD 2.8 billion.
In terms of expenses, the financial services major aims to save USD 50 billion to USD 52 billion in 2009.
"Expenses are expected to be down 20 per cent from peak levels," the firm led by India-born Pandit said.
However, Citi pointed out that underlying business remained strong and that revenues were stable.
At the end of the fourth quarter of 2007, the company's head count stood at 3,75,000.
In the first three quarters of this year, the company has reduced its workforce by about 23,000 persons.
Earlier today, television channel CNBC in a report on its website, quoting people close to the company, reported that job cuts might go up to as high as 50,000.
"These people say these cuts will occur in a relatively shorter period of time, such as over the next five or six months," the report noted.
Courtesy: The Independent
Citigroup, the ailing US financial giant, shocked the market yesterday by announcing that it would cut 52,000 jobs by the second half of next year.
The planned 15 per cent cut in staff numbers comes on top of 23,000 jobs already axed since the bank's employee numbers peaked at the end of last year and are designed to cut costs by 20 per cent to about $50bn (£33.3bn). The bank warned that London and New York would inevitably bear the brunt of job cuts.
Sir Win Bischoff, the bank's chairman, admitted that, along with other banks, Citi had hired too many people during the long credit-driven boom and predicted a wave of cuts by financial services companies.
"What all of us have done – and perhaps injudiciously – we've added a lot of people over ... this very benign period," said Sir Win. "If there is a reversion to the mean ... those job losses will obviously fall particularly heavily on the financial sector. Certainly they will fall particularly heavily on London and New York."
Citi, which operates in more than 100 countries, employed 352,000 people worldwide at the end of September and has more than 11,000 staff in the UK, including many big-spending investment bankers. Vikram Pandit, the bank's under-pressure chief executive, said yesterday that the total number of employees would shrink to about 300,000 by the end of June.
Mr Pandit announced the cost-cutting measures at a "town hall" meeting for staff designed to set out a clear direction for the financial conglomerate, which has suffered big losses from exposures to debt securities and rising bad debts. Mr Pandit, who took over in December after his predecessor Chuck Prince was forced out, has faced investor attacks for not getting a firm grip on Citi's sprawling global empire.
About half the 52,000 cuts will come from sales of businesses, with 18,000 already in the pipeline from the sale of Citi's German consumer bank and an Indian outsourcing operation. The remaining cuts of about 25,000 are likely to include forced redundancies and to be heavily weighted towards investment banking, particularly businesses such as fixed-income which lie at the heart of the credit crisis.
A Citi spokesman yesterday declined to comment beyond Mr Pandit's presentation to staff.
Market observers expect further big job cuts in financial services, a key driver of the UK and US economies, as a sharp recession and the credit crisis weigh heavily on the once-booming industry. The Centre for Economics and Business Research predicts a loss of 62,000 City-related jobs in the UK by the end of next year from 2007's peak of 352,000 with big knock-on effects for other sectors.
Shaun Springer, chief executive of the City recruiter Napier Scott, said: "This is both a reaction to the paucity of profit this year and a proactive assessment of business next year. If there is little business to be had at Citi, that is a pretty fair reflection of top-tier financial institutions in general."
Citi shares shed 19 per cent last week, falling below $10 for the first time since its formation from the merger of Travelers Group and Citicorp in 1998.
Citi was already under fire from investors before the credit crunch started due to out-of-control costs and a series of mishaps across its network. Sir Win signalled yesterday that Citi's bosses would follow Goldman Sachs and UBS by going without bonuses for this year. "Watch this space," he said.
Mr Pandit has faced calls for Citi to be broken up but, though further minor disposals are in the pipeline, he defended the company's "global universal bank model", telling staff that the core strategy remained unchanged. He also highlighted the bank's strong capital position after the US government's $25bn injection, bringing Citi's tier one ratio to 10.4 per cent, just behind JPMorgan and ahead of Bank of America and Wells Fargo on 9.8 per cent each.
The bank's job cuts are already bigger than any other financial institution, according to Bloomberg. UBS, Merrill Lynch and Wachovia have all revealed more than 5,000 job reductions.
The bank has lost about two-thirds of its market value this year after four quarterly losses totalling $20bn. The bank's shares lost a further 6.6 per cent yesterday, closing at $8.89. Citi was last week forced to deny reports that Sir Win, the City grandee, had lost the confidence of some of the bank's directors.
Banks and brokerages worldwide have announced more than 200,000 job cuts since the credit crisis started in August last year. Goldman Sachs is cutting about 3,200 employees, or 10 per cent of its workforce.
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