Page last updated at 20:43 GMT, Monday, 17 November 2008

Citigroup job cull to hit 75,000

Citigroup world headquarter, New York
Citigroup is trying to combat the effects of the credit crunch

US bank Citigroup has announced plans for about 52,000 new job cuts, on top of 23,000 cuts already made this year.

Citigroup said the 75,000 job cuts represented a reduction of about 20% of its staff, leaving it with 300,000 jobs worldwide "in the near term".

The cuts will come from redundancies, the sale of units and natural wastage, the bank said.

Citigroup has lost more than $20bn (13.6bn) in the past year because of the global financial crisis.

It has reported four straight quarterly losses and some analysts believe the bank will not make a profit again until 2010.

Of the 52,000 job losses, about half are understood to be accounted for already, with the previously announced sale of Citigroup's German retail banking business and an Indian outsourcing operation.

Citigroup is expected to cut the remaining 25,000 jobs by the first half of 2009. Citigroup declined to comment on the cuts.

Turnaround plan

Certainly [the job cuts] will fall particularly heavily on London and New York
Win Bischoff, Citigroup chairman

"Underlying business remains strong and revenues have been stable," the bank said.

Citigroup also said its capital position was "very strong".

The bank expects its expenses to be down 20% from peak levels, to about $50bn in 2009, after the job cuts have taken effect.

"Certainly [the job cuts] will fall particularly heavily on London and New York," Citigroup chairman Win Bischoff said at a business forum in Dubai.

Citigroup's chief executive Vikram Pandit has come under pressure from critics who have doubted his ability to turn around the company and weather the financial crisis.

Shares in Citigroup dropped 6.2%. They are down almost 70% in value this year.

Economy in trouble

Citigroup, one of the largest US banks, is one of nine financial institutions benefiting from the US government's bail-out programme.

The Treasury announced last month that it would be providing cash injections worth $125bn to be shared between Citigroup, JP Morgan Chase, Bank of America, Goldman Sachs, Morgan Stanley, Wells Fargo, Bank of New York Mellon, State Street and Merrill Lynch.

"The news of job cuts is one more indication that the economy is in a very difficult shape right now," said Ernie Ankrim, chief investment strategist for Russell Investment Group.

Portfolio manager Walter Todd at Greenwood Capital Associates said: "If the past is any guide, Wall Street overshoots in terms of hiring and then overshoots when it's time to cut jobs.

"But it's not clear if the past is any guide here. It's a moving target, because the markets and the economy are in flux," he added.

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