Citi cuts 52,000 more jobs

AGAIN !!!

Citi cuts 52,000 more jobs
By Francesco Guerrera in New York
Published: November 17 2008 14:17 Last updated: November 18 2008 01:18

Citigroup took radical action on Monday to cushion the blows of the financial turmoil and revive its flagging share price, announcing plans to axe 52,000 jobs, or one in seven employees, and slash costs by about $10bn (£6.6bn).

The moves, unveiled by chief executive Vikram Pandit in a meeting with staff, are a dramatic escalation of Citi’s efforts to deal with a crisis that has forced it to record a loss in each of the past four quarters. The company’s poor performance and continued slide in its shares have raised the pressure on Mr Pandit amid simmering internal disagreements and a boardroom revolt over Citi’s failure to buy Wachovia, a US regional lender.

Citi’s shares have lost nearly three-quarters of their value in the past year. They fell 6.6 per cent to $8.89 on Monday after it warned that next year would be “difficult”.
In a further sign of Citi’s fall from grace, a regulatory filing showed that Carl Icahn, the activist investor who targets companies whose shares are in the doldrums and often agitates for strategic changes, held a small holding of 800,000 shares.
Citi has suffered more than $50bn in writedowns and credit provisions since the crisis began. In the first nine months of the year, the US financial services giant announced plans to cut 23,000 jobs as the credit crunch took a severe toll on its investment banking and consumer businesses. Monday’s cuts will be in addition to these.

About half of the redundancies will be in businesses Citi is selling, including its German retail banking operations. The rest will come from cuts in existing businesses, including Citi’s investment banking operations in New York, London and Hong Kong. Back-office jobs will also be reduced.

Mr Pandit said the new cuts would be completed “in the near term”, bringing total staff to 300,000 – the lowest in nearly three years. “That’s a tough message,” he said, according to people who listened to his “town hall” meeting with staff. “This is probably the single toughest part of my job here . . . We’re not doing that because we want to, but because we have to.”

Mr Pandit, who took over in December after the ousting of Chuck Prince, said expenses in 2009 would be about $52bn, down from $62bn this year – a 20 per cent fall on the record reached in the last quarter of 2007.

Citi on Monday classified $80bn of toxic assets as “held for investment” – an accounting treatment that means it will not have to take quarterly writedowns.
Citi said more than $120bn in securitised assets held in off-balance sheet vehicles would come back on to its books due to a recent accounting change. Citi will have to use capital to cover these assets and said it was “planning for these eventualities”. Citi also said its maximum exposure to $406bn in assets held in other off-balance sheet entities could total $131bn.
Additional reporting by David Ricketts
Copyright The Financial Times Limited 2008