Citi's CEO Confident That Job Cuts Will Redeem the Stock

By Mike Caggeso

Citigroup Inc. (C) Monday unveiled plans to cut more than 50,000 jobs in the “near term” and slash expenses by 20% to preserve capital as it faces a global slowdown that’s expected to push well into 2009.

The cuts are on top of the 23,000 jobs eliminated so far this year. Chief Executive Officer Vikram Pandit plans to whittle the company’s workforce down to 300,000. By the time Pandit puts down the machete, he’ll have lopped off about 20% of the company’s headcount since Citigroup’s peak.

Just last week, Citigroup announced the release of 10,000 employees in addition to hiking interest rates an average of 3% for about one-in-five of its credit card holders. 

Since the subprime market caved in last year, bank and brokerage firms around the world have shed nearly 160,000 jobs, Bloomberg reported. Citigroup’s plan to let go 50,000 is the largest workforce reduction in the U.S. financial industry since it first started to unravel.

Since the crisis started in June 2007, Citigroup’s shares have dropped like an anchor, falling more than 83%. 

Still, that’s not enough to shake Pandit’s confidence that his executions will produce results and redeem the company’s stock. Last week, Pandit and another top manager scooped up about 1 million shares between the two of them. Pandit bought 750,000 shares at prices between $8.92 and $9.45, Dow Jones reported.

In Citigroup’s presentation, the company pointed out that it has the lowest exposure to the U.S. consumer mortgage market of the country’s top four banks. Citigroup has $218 billion in U.S. mortgages, Bank of America Corp. (BAC) has $461 billion, Wells Fargo & Co. (WFC) has $340 billion, and JPMorgan Chase & Co. (JPM) has $302 billion. 

Other banks are expected to continue cutting jobs. The London Times reported over the weekend that JPMorgan is planning to cut thousands. Goldman Sachs Group (GS) is planning to cut 10% of its workforce.

Fidelity Investments, the world’s largest mutual fund manager, plans to shed 1,700 jobs in the first quarter – in addition to the 1,300 it cut last week.

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Comments

[herbert hoover:]

The fact that this guy still has a job is amazing.

2008 Nov 18 09:16 AM

[jmmx:]

Citi deserves to just go under - they have the most terrible service imaginable.

In 2006 I spent 8 months in Spain. I signed with Citi because they advertised a cheap transfer rate internationally. So I went to Sevilla (2 ours from where I was staying) to set up my account. Fine. Then tried to xfer online. The long and the short is that over the next several weeks I spent AT LEAST 40 HOURS trying to perform this xfer and never could get it done. Their phone help was pathetic. I had to deal with the Madrid office but Madrid could not see my acct cause it was in Sevilla branch. Finally - after hours and hours and hours on the phone (thank goodness for Skype) and traveling back and forth to Sevilla a few times, I just gave up. I never could get a transfer made. And in the end I discovered that they would have charged a percentage on top of the fee anyway.

CITI SUCKS!!! IMHO

2008 Nov 18 11:31 AM