News and analysis You are here: ninemsn > Money > News and analysis Citigroup to slash 50,000 jobs 18/11/2008 4:31:12 AM Citigroup has announced it will slash 50,000 jobs worldwide as the US banking giant tightens its belt further to cope with a global financial crisis and heavy losses.
The company, in a document for a presentation to employees by chief executive Vikram Pandit, said that the "headcount expected to be down 20 percent in the near-term from peak levels."
At that peak, in the 2007 fourth quarter, Citigroup had a global workforce of 375,000 employees, according to the online document. By the end of September the workforce had been trimmed to 352,000; the additional job cuts announced would pare it to approximately 300,000.
Citigroup said its capital position was "very strong" and it had made a "significant reduction in risky assets."
Citigroup, whose shares have been battered amid the credit crisis, said it was "getting fit — fast!" and would reduce its overall expenses by 20 percent in the short term from peak levels. The cost-cutting measures would bring spending to approximately US$50-52 billion in 2009.
The further belt-tightening was signaled Friday when the bank announced it would make additional job cuts and that Pandit and other key executives had bought 1.3 million shares to show confidence in the company.
But the string of announcements has failed to calm investor fears that the bank, once the country's largest, can weather the financial crisis.
Shares plunged 6.21 percent to 8.93 dollars in late morning trade, after losing some 24 percent last week.
Citi, a component of the blue-chip Dow Jones Industrial Average, has tumbled 70 percent since the start of the year, with the bank hit by hefty writeoffs linked to the US real estate crisis.
"Management has come under increasing pressure to restore profitability and arrest the steep slide in shares," Charles Schwab & Co. analysts wrote in a client note.
The ailing bank was among the nine big US banks that agreed last month to give the US government equity stakes in exchange for a combined 125 billion dollars under a financial sector rescue plan. Citi got a 25 billion dollar injection.
The ailing banking giant, which has undertaken several restructurings amid the crisis, has penciled in US$2.1 billion in charges this year for the planned elimination of 22,000 jobs, of which some 13,000 have been completed.
Last month, Citi reported a third-quarter loss of US$2.8 billion, its fourth straight quarter in the red.
The troubled bank is saddled with billions of dollars in losses tied to mortgage investments that lost value in the collapse of the US real estate market and the credit squeeze that erupted last year.
Since last year Citi has raised more than US$50 billion to shore up its balance sheet, reduced its investment portfolio by more than US$100 billion, reorganised activities and sold several businesses, such as CitiStreet, CitiCapital, BPO in India and a retail bank in Germany.
The US Treasury announced on October 14 that it had finalised the infusion of US$125 billion into nine major commercial banks as part of a US$700 billion rescue plan for the embattled financial sector, reeling from the worst financial crisis since the Great Depression.
