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2008-11-18 12:22:09
By MADLEN READ, AP Business Writer Madlen Read, Ap Business Writer Mon Nov 17,
7:52 pm ET
NEW YORK Citigroup Inc. is shedding approximately 53,000 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
percent since the first quarter of the year, also plans to trim expenses by 19
percent in 2009 from third-quarter levels, to $50 billion.
The plans, posted on the company's Web site, were discussed by CEO Vikram
Pandit at the company's town hall meeting in New York Monday with employees.
The company said it is shrinking its work force by 20 percent 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 of the expected work force reductions will come from business 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 work force 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 $2.8 billion during the third quarter.
In an effort to instill confidence in the company, Citigroup emphasized in its
presentation Monday that its Tier 1 capital ratio, a measure of financial
strength, is 10.4 percent after a $25 billion investment from the government
part of the $700 billion financial rescue package passed by Congress last
month. That ratio is higher than peers Bank of America Corp. and Wells Fargo &
Co., after their purchases of Merrill Lynch and Wachovia Corp., respectively.
Citigroup also stressed that it has doubled reserves in a year to $24 billion;
that its revenues are stable; and that Citigroup has lower exposure to U.S.
consumer mortgages than JPMorgan Chase & Co., Bank of America and Wells Fargo.
But the announcements were not met with enthusiasm from investors. Citigroup
stock fell 63 cents, or 6.6 percent, to close at $8.89. 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.
"What all of us have done and perhaps injudiciously we've added a lot of
people over ... this very benign period," Bischoff said.
"If there is a reversion to the mean ... those job losses will obviously fall
particularly heavily on the financial sector," he added. "Certainly they will
fall particularly heavily on London and New York."
A Citigroup spokesman said that while certain regions and businesses might have
higher concentrations of job cuts, they would generally be across the entire
company and around the world.
In his comments to The Associated Press, Bischoff did not rule out the
likelihood that Citi's leaders would go without bonuses this year a move that
would effectively amount to a substantial pay cut for the company's executives.
"Watch this space," he said when asked about lost bonuses.
On Sunday, Goldman Sachs Group Inc. said seven top executives, including Chief
Executive Lloyd Blankfein, opted out of receiving cash or stock bonuses for
2008 amid the ongoing credit crisis.