Monday, November 17, 2008

Citigroup to cut up to 50,000 jobs - CNBC

NEW YORK (Reuters) - Citigroup Inc plans to cut up to 50,000 jobs, CNBC television said on Monday, as souring economies and global credit conditions cause the U.S. bank with the farthest reach worldwide to retrench.

The cuts are on top of the roughly 23,000 jobs Citigroup has already slashed this year, and would leave the second-largest U.S. bank with about 300,000 jobs worldwide.

Cuts are expected to come from layoffs, the sale of units and attrition, CNBC said. Overall capital expenses may decline as much as 20 percent, and cuts are expected to be deep in investment banking, it said.

Citigroup did not respond to a request for comment.

According to the Associated Press, Chairman Sir Win Bischoff said Monday at a Dubai conference, "What all of us have done, and perhaps injudiciously, we've added a lot of people over ... this very benign period."

The cuts are Chief Executive Vikram Pandit's most dramatic move yet to restore profitability and bolster a sagging share price. Last week, Citigroup's stock fell into the single digits for the first time since Sanford "Sandy" Weill created the company in 1998 from the merger of Travelers Group Inc and Citicorp.

Pandit became chief executive last December and has faced much criticism from investors and others for failing to implement a workable turnaround plan for Citigroup.

The New York-based bank has lost more than $20 billion in the last year, hurt by bad bets on complex and risky debt, often tied to mortgages. Some analysts say the bank might not be profitable before 2010.

Pandit was holding a "town hall" meeting for employees Monday morning to discuss the bank's plans.

Shares of Citigroup have fallen 68 percent this year, leaving the bank with a market value of only $51.9 billion, barely twice the $25 billion of capital it received from the U.S. Treasury Department's bank bailout plan.

Citigroup was built principally by Weill, who ceded control to Pandit's predecessor, Charles Prince, in 2003.

Analysts believe Citigroup never invested enough in technology or to make the bank's parts work well together.

Its geographic diversity, including operations in more than 100 countries, is now also working against it as customers in such countries as Brazil, India and Mexico find it harder to keep up with their bills.

At the same time, Citigroup's ability to grow at home is relatively limited. Last month, Wells Fargo & Co derailed Citigroup's attempt to buy Wachovia Corp and its $418.8 billion of deposits.

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