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Citi to Shed 50,000 Jobs Through Asset Sales and Layoffs
November 18, 2008
One of the largest banks in the world will be significantly smaller next year, as Citigroup details its announced plan to reduce its workforce by more than 50,000.
New York-based Citigroup Inc. (NYSE: C) announced a monumental job cut yesterday of over 50,000 positions, or 15 percent of their 352,000 workforce over the next year.
The announced job cuts are adding to the 23,000 job cuts announced by Citigroup in the third quarter.
In October, the bank eliminated 9,100 positions, announced a decrease of 16,900 positions yesterday and has plans to cut 26,000 positions through asset sales. Citigroup is aiming to downsize their employee number to 300,000.
Most of the downsizing will come from two categories: divestitures and attrition/layoffs, a Citigroup spokeswoman told insideARM.
Citigroup's executives are racing to match expenses to its declining business: the company has lost $10 billion over the past nine months.
In an employee meeting Monday morning, Citi Chief Executive Officer Vikram Pandit didn't say which divisions would be targeted for the most job cuts, or which businesses might be sold. Pandit has been selling businesses he considers “non-core'” to the bank's operations.
Restructuring and asset sale charges incurred from downsizing have not been fully determined yet, but once they are determined, Citigroup will announce the charges in due course, said the spokeswoman.
Citigroup’s third quarter earnings report revealed a net loss of $2.8 billion, including $4.4 billion in net pre-tax write-downs in Securities and Banking, $4.9 billion in net credit losses and a $3.9 billion net charge to increase loan loss reserves.
Pandit is accelerating cost cuts after the bank's stock price fell 19 percent last week on the concern that a global recession will curb new lending just as more home and credit card loans become delinquent. Citi’s stock is now trading at a 12 year low.
Profits remain elusive following four straight quarterly losses, as bad-loan costs run $4 billion above last year's levels. Last year, the bank lost more than $20 billion. According to Reuters, analysts don’t think the bank will turn a profit before 2010.
Citigroup spokeswoman Christina Pretto told BusinessWeek that in May Pandit announced a blueprint for stabilizing the bank's business, including $15 billion in "reengineering benefits." Pretto said the recent job cut announcement, "is simply a way of telling the world what is the next wave of our effort to reduce our expenses and be a more productive company."
The announced job cuts are adding to the 23,000 job cuts announced by Citigroup in the third quarter.
In October, the bank eliminated 9,100 positions, announced a decrease of 16,900 positions yesterday and has plans to cut 26,000 positions through asset sales. Citigroup is aiming to downsize their employee number to 300,000.
Most of the downsizing will come from two categories: divestitures and attrition/layoffs, a Citigroup spokeswoman told insideARM.
Citigroup's executives are racing to match expenses to its declining business: the company has lost $10 billion over the past nine months.
In an employee meeting Monday morning, Citi Chief Executive Officer Vikram Pandit didn't say which divisions would be targeted for the most job cuts, or which businesses might be sold. Pandit has been selling businesses he considers “non-core'” to the bank's operations.
Restructuring and asset sale charges incurred from downsizing have not been fully determined yet, but once they are determined, Citigroup will announce the charges in due course, said the spokeswoman.
Citigroup’s third quarter earnings report revealed a net loss of $2.8 billion, including $4.4 billion in net pre-tax write-downs in Securities and Banking, $4.9 billion in net credit losses and a $3.9 billion net charge to increase loan loss reserves.
Pandit is accelerating cost cuts after the bank's stock price fell 19 percent last week on the concern that a global recession will curb new lending just as more home and credit card loans become delinquent. Citi’s stock is now trading at a 12 year low.
Profits remain elusive following four straight quarterly losses, as bad-loan costs run $4 billion above last year's levels. Last year, the bank lost more than $20 billion. According to Reuters, analysts don’t think the bank will turn a profit before 2010.
Citigroup spokeswoman Christina Pretto told BusinessWeek that in May Pandit announced a blueprint for stabilizing the bank's business, including $15 billion in "reengineering benefits." Pretto said the recent job cut announcement, "is simply a way of telling the world what is the next wave of our effort to reduce our expenses and be a more productive company."
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Comments
Comment from tommytoons on November 18, 2008 at 12:20PM EST
It seems Citigroup is getting loads of help, what from the Bailout from Taxpayers, raising their rates on their credit cards, laying off thousands,selling assets, The Company's Win, Woo and Wow!Customer service campaign should be named, Lose, Fizzle and Screw You! To their employees, and customers. I wonder if the executives will take a cut from any bonus this year?
Comment from Rossco on November 18, 2008 at 12:51PM EST
It is important to be lean in downward economies and 352,000 is not lean. While I'm not in favor of layoffs I am in favor of Citi employing 300,000 works and focusing on the core business.
Comment from star on November 18, 2008 at 1:01PM EST
Yeah, I concur with the above. This is and has been a concern of a lot of people. This is part of the reason why the country is in financial straits. Every large company should look in their own backyard, particularly when it comes to handing out bonuses. The payouts are off-the-wall. Maybe they should put some of that money back into company instead of their pockets. Paying out millions to their shareholders and top executives is absolutely ridiculous! So the company throws it back into our faces by laying off people..eye to an eye, I guess!
Comment from Anonymous on November 18, 2008 at 5:26PM EST
WoW that is like the population of a small college town. It's interesting to see that even the giants like City Group are feeling the down side of the recession. Although its a really sad truth that the head honchos will most definitely not take the bonus cut this year to counter the 10 billion dollar loss.
Comment from Anonymous on November 19, 2008 at 6:34AM EST
Wow is right, when they say they are selling parts of the business. They also leave out that they are moving jobs to India. I am sure all of those top executives will not go without a bonus. Its screw the little guy like you or I and hale to the executive that put us here to begin with.
Comment from anon 123 on May 9, 2009 at 2:52PM EST
Read Citi's 2008 financial statement closely and you'll find the bonus structure segment really interesting... Citi published that the top management will not receive bonuses in 2009, and yes they kept their word, HOWEVER... read closely...the top execs will receive a deferred 2008 bonus in excess of 3 - 6 MM each in 2010 in addition to bonuses for 2009 operating performance. These deceptive reporting practices really are everywhere. Talk about tongue in cheek! I wonder if their 30,000 job displaced employees will receive the same deferred bonuses. It seems that lies, greed and corruption really have no limits, once we let them in our businesses.