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Tue, Jun 24, 2008 - Page 10 News List

Citigroup preparing to cut more jobs

DOWNSIZING Over the past year the US bank has announced plans to eliminate more jobs than any other financial institution; notices are expected to go out later this week

BLOOMBERG

Citigroup Inc may begin another round of job reductions as soon as this week as part of a plan to cut its trading and investment-banking workforce by 10 percent, said a person with knowledge of the matter.

The largest US bank is about halfway through the 6,000 job cuts at the division signaled in March, said the person, who declined to be identified because Citigroup hasn’t disclosed the plans publicly.

The company employs about 300,000 people worldwide and has announced more than 13,000 job reductions this year.

Chief executive officer Vikram Pandit is lowering costs and shedding assets after the New York-based company reported two straight quarterly losses totaling US$15 billion.

The world’s largest banks and brokerage firms have slashed more than 80,000 jobs since subprime mortgage defaults infected credit markets and led to almost US$400 billion of writedowns and losses.

I see more downsizing to come, said Andy Mantel, managing director of Pacific Sun Investment Management Ltd in Hong Kong. Banks need to take precautionary measures.

Citigroup has disclosed plans to eliminate more jobs during the past year than any other financial institution, data compiled by Bloomberg shows.

UBS AG, Lehman Brothers Holdings Inc and Merrill Lynch & Co are among the companies to announce more than 5,000 job reductions.

Citi indicated earlier this year that it would be resizing this business in response to market conditions and as part of our ongoing re-engineering efforts, said Dan Noonan, a spokesman for the division, in a prepared statement.

The company probably will report a second-quarter loss of US$40 a share after US$8.7 billion of asset writedowns, UBS analyst Glenn Schorr said in a note to clients on Friday.

Schorr’s prediction came after chief financial officer Gary Crittenden forecast substantial additional writedowns and more losses on consumer loans. Citigroup’s US$42 billion of credit losses and writedowns since last year account for about 10 percent of the global total, Bloomberg data shows.

Citigroup has lost more than any company in the mortgage market rout and its shares tumbled 63 percent in the past year.

Pandit, 51, was promoted in December to replace Charles Prince, who was ousted two months earlier.

Citigroup said in January it would eliminate about 4,000 jobs in the securities division, and said two months later that the number had increased by about 2,000.

Citigroup then said in April it would slash 7,000 jobs outside the investment banking group over the next year, and executives have said further reductions are likely.

The Wall Street Journal reported on Sunday that employees may begin receiving termination notices this week.

Goldman Sachs Group Inc, the biggest US securities firm, will get rid of as much as 10 percent of the jobs in its investment banking division in one of the company’s largest single rounds of headcount reductions this year, the Financial Times reported yesterday, without citing anyone.

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