Page last updated at 09:53 GMT, Thursday, 1 January 2009

Banks 'feel remorse' for downturn

Citigroup world headquarter, New York
Citigroup is set to cut 52,000 jobs worldwide in early 2009

The chairman of one of the world's largest banks has told the BBC that bankers must take some responsibility for the global economic downturn.

Sir Win Bischoff, from Citigroup, said his industry was "partly to blame" and some within it did feel "remorse".

He said forthcoming bonuses would be "way down" at his bank, which received a £35bn bailout from the US government.

Sir Win and other senior Citigroup executives have said they will forgo their 2008 bonuses.

In a memo to employees, Sir Win, along with chief executive Vikram Pandit and senior adviser Robert Rubin, said it was fair for them to give up their bonuses - and to cut those of other executives - in light of the "harsh realities of 2008, primarily our earnings results".

Citigroup lost $10.42 billion (about £7.2bn) between January and September 2008, and plans to cut 52,000 jobs by early this year.


Sir Win, who was guest editor of BBC Radio 4's Today on Thursday, told the programme that banks "ultimately do carry some of the responsibility" for the economic downturn.

"I think it's very important for banks not to deny that they carry some of the can," he said.


"My view is that they are partly to blame and there are people who feel remorse about this.

"Do they all? I don't know."

Sir Win said it was "a really painful period" for everyone involved in the banking industry.

He said bankers did not have "their heads in the sand" - but no-one had foreseen the severity of the current crisis.

Sir Win said the "root cause" was the widespread use of financial products "which appeared to have sufficient safety factors built in," but were, in fact, too risky.

"That then led down a slippery path… [it] actually led to this kind of confidence that asset prices could not possibly fall, commodity prices could not fall," he added.

Sir Win said some bonuses would still be paid to those working in "very useful and very profitable" sections of his company.

Sir Win Bischoff, chairman of Citigroup
Sir Win said it was 'a painful period' for everyone in banking

Overall, however, he said rewards would be cut "substantially".

"For a lot of people there are not going to be bonuses. Bonuses are going to be way down.

"Finance used to be a profession which was very attractive financially. I think it's going to come back much more into the mainstream in terms of remuneration."

One of Citigroup's Wall Street rivals, Goldman Sachs, has cut its pay bill by half this year, although its 30,000 employees still earned an average of £250,000.

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