April 17, 2009 4:00 PM
- Text
Citigroup To Axe 53,000 Jobs Globally
(CBS/AP)
Citigroup Inc. is cutting approximately 53,000 more jobs in the coming quarters as the banking giant struggles to steady itself after suffering massive losses from deteriorating debt.
The presentation of the company's plans, posted on the company's Web site, are being discussed by CEO Vikram Pandit at the company's town hall meeting in New York Monday with employees.
The company said total headcount is being reduced by 20 percent from its peak of 375,000 at the end of 2007; the company had already announced in October that it was eliminating about 22,000 jobs from those levels.
The New York-based bank has posted four straight quarterly losses, including a loss of $2.8 billion during the third quarter.
The presentation also says that the company is going into 2009 in a stronger position than in 2008, having significantly reduced risky assets, and securing a "very strong" capital position.
Citigroup added approximately $75 billion in assets since the third quarter of 2007, a third of which ($25 billion) came from selling preferred equity to the government via the Treasury Department's Congressionally-approved bailout program.
However, last week, Treasury Secretary Henry Paulson announced that, contrary to the original plans for the government's bailout, he would not purchase troubled assets from banks, for which Citibank (hard-hit by the mortgage crisis) had already been approved.
The presentation stated the global group had $2.050 trillion in total assets, and $750 billion in deposits.
The 53,000 job cuts are in addition to the 22,000 already being eliminated from Citigroup Inc.'s 375,000-member work force as of the end of 2007. The latest cuts bring the total job reductions to 20 percent.
Citibank is also reportedly set to raise interest rates on approximately one-fifth of its 54 million credit card customers.
Citi shares fell 42 cents, or 4.4 percent, to $9.10 in morning trading. The company's shares have been trading at 13-year lows.
Shortly before the town hall meeting in New York, Citigroup Chairman Win Bischoff said at a business forum in Dubai, United Arab Emirates, that it would be irresponsible for Citi and other companies not to look at staffing in the event of a prolonged economic downturn.
"What all of us have done - and perhaps injudiciously - we've added a lot of people over ... this very benign period," Bischoff said.
"If there is a reversion to the mean ... those job losses will obviously fall particularly heavily on the financial sector," he added. "Certainly they will fall particularly heavily on London and New York."
In his comments to the Associated Press, Bischoff did not rule out the likelihood that Citi's leaders would go without bonuses this year - a move that would effectively amount to a substantial pay cut for the company's executives.
"Watch this space," he said when asked about lost bonuses.
On Sunday, Goldman Sachs Group Inc. said seven top executives, including Chief Executive Lloyd Blankfein, opted out of receiving cash or stock bonuses for 2008 amid the ongoing credit crisis.
Last year, Blankfein received total compensation of $54 million, according to calculations by The Associated Press, making him the sixth highest-paid CEO at a Standard & Poor's 500 company in 2007.
The presentation of the company's plans, posted on the company's Web site, are being discussed by CEO Vikram Pandit at the company's town hall meeting in New York Monday with employees.
The company said total headcount is being reduced by 20 percent from its peak of 375,000 at the end of 2007; the company had already announced in October that it was eliminating about 22,000 jobs from those levels.
The New York-based bank has posted four straight quarterly losses, including a loss of $2.8 billion during the third quarter.
The presentation also says that the company is going into 2009 in a stronger position than in 2008, having significantly reduced risky assets, and securing a "very strong" capital position.
Citigroup added approximately $75 billion in assets since the third quarter of 2007, a third of which ($25 billion) came from selling preferred equity to the government via the Treasury Department's Congressionally-approved bailout program.
However, last week, Treasury Secretary Henry Paulson announced that, contrary to the original plans for the government's bailout, he would not purchase troubled assets from banks, for which Citibank (hard-hit by the mortgage crisis) had already been approved.
The presentation stated the global group had $2.050 trillion in total assets, and $750 billion in deposits.
The 53,000 job cuts are in addition to the 22,000 already being eliminated from Citigroup Inc.'s 375,000-member work force as of the end of 2007. The latest cuts bring the total job reductions to 20 percent.
Citibank is also reportedly set to raise interest rates on approximately one-fifth of its 54 million credit card customers.
Citi shares fell 42 cents, or 4.4 percent, to $9.10 in morning trading. The company's shares have been trading at 13-year lows.
Shortly before the town hall meeting in New York, Citigroup Chairman Win Bischoff said at a business forum in Dubai, United Arab Emirates, that it would be irresponsible for Citi and other companies not to look at staffing in the event of a prolonged economic downturn.
"What all of us have done - and perhaps injudiciously - we've added a lot of people over ... this very benign period," Bischoff said.
"If there is a reversion to the mean ... those job losses will obviously fall particularly heavily on the financial sector," he added. "Certainly they will fall particularly heavily on London and New York."
In his comments to the Associated Press, Bischoff did not rule out the likelihood that Citi's leaders would go without bonuses this year - a move that would effectively amount to a substantial pay cut for the company's executives.
"Watch this space," he said when asked about lost bonuses.
On Sunday, Goldman Sachs Group Inc. said seven top executives, including Chief Executive Lloyd Blankfein, opted out of receiving cash or stock bonuses for 2008 amid the ongoing credit crisis.
Last year, Blankfein received total compensation of $54 million, according to calculations by The Associated Press, making him the sixth highest-paid CEO at a Standard & Poor's 500 company in 2007.
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David Morgan David Morgan is a senior editor at CBSNews.com and cbssundaymorning.com.
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