New York: Citigroup Inc revealed plans to cut 52,000 jobs by early next year in Chief Executive Vikram Pandit's most dramatic move yet to restore profitability and bolster a sagging share price.
The cuts, announced on Monday, will affect 15 per cent of Citigroup's workforce and come on top of 23,000 jobs eliminated between January and September as souring economies and global credit conditions cause the US bank with the farthest reach worldwide to retrench.
The new cuts will leave the second-largest US bank with about 3 lakh jobs worldwide, down 20 per cent from the end of 2007 and roughly the same number it had at the end of 2005.
Cuts are expected from layoffs, the sale of units and attrition. Citigroup plans to slash expenses 20 per cent from peak levels and spend $50 billion to $52 billion in 2009.
That compares with $61.9 billion over the last four quarters.
Last week, Citigroup stock fell into the single digits for the first time since Sanford "Sandy" Weill created the bank in 1998 from the merger of Travelers Group Inc and Citicorp.
"If the past is any guide, Wall Street overshoots in terms of hiring and then overshoots when it's time to cut jobs," said Walter Todd, portfolio manager at Greenwood Capital Associates LLC, which invests $1 billion.
"But it's not clear if the past is any guide here. It's a moving target, because the markets and the economy are in flux. Shares of Citigroup, a Dow Jones industrial average component, fell 40 cents, or 4.3 percent, to $9.12 in morning trading on the New York Stock Exchange.
Citigroup's cuts are the deepest by any financial services company since the global credit crisis began last year.
Well over 100,000 jobs have already been lost at the largest banks and brokerages.
In the last month, Goldman Sachs Group Inc began cutting 3,200 jobs, while Morgan Stanley said it will cut 10 per cent of the jobs in the unit housing its investment banking operations.
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Citigroup said it plans to make the latest job cuts in the "near-term." People at the New York bank said it expects to complete the reductions in the first couple of months of 2009.Pandit under pressure
Pandit became Citigroup's Chief Executive last December, and has faced much criticism from investors and others for failing to implement a workable turnaround plan for the bank.
The 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.
Through Friday, shares of Citigroup had fallen 68 per cent 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 US 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.
The bank has been trying to downplay reports of dissension among its directors regarding the performance of Pandit and the bank's chairman, Sir Win Bischoff. Last week, lead director Richard Parsons said the board supported management's plans for the bank.
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