- The Washington Times - Tuesday, November 18, 2008

NEW YORK Citigroup Inc.Chief Executive Officer Vikram Pandit said the global banking giant will eliminate at least 52,000 jobs over the next year, twice the target announced last month, as loan losses surge and the economy shrinks.

The reductions, disclosed at a meeting with employees in New York, include 9,100 positions that the bank began eliminating last month and about 16,900 announced Monday. Citigroup will shed a 26,000 additional positions through asset sales, 7,900 more than in the previous plan. The total represents 15 percent of Citigroup’s work force of about 352,000.

“The coming year could be a difficult one for our clients and customers,” Mr. Pandit said in a memo to employees. Management “will stay focused on strengthening Citi and positioning all of us to benefit when conditions inevitably improve.”

Mr. Pandit is accelerating cost cuts after the bank’s stock price plunged 19 percent last week amid concern a global recession will curb new lending just as more home and credit-card loans are becoming delinquent. With bad-loan costs running $4 billion above last year’s levels, profits remain elusive after four straight quarterly losses.

“You can cut the expense base, but if you don’t stabilize the asset quality, it can only have a moderate impact,” said Joe Scott, a banking analyst at Fitch Ratings.

Citigroup’s stock is at its lowest price in 12 years on concern that a global recession may extend the bank’s losing streak. Its shares fell 63 cents Monday to close at $8.89 on the New York Stock Exchange.

The slide in the stock may hinder the bank’s ability to raise capital by selling shares to private investors or to the public, Mr. Scott said.

Since last December, Citigroup has raised about $75 billion by selling equity stakes and by booking gains from asset sales. The figure includes last month’s $25 billion capital injection from the U.S. Treasury under the government’s bank-stabilization program.

New York Attorney General Andrew Cuomo said Monday that Citigroup’s executives should forgo bonuses this year.

“After four consecutive quarterly losses, it seems only fair that top executives should shoulder their fair share of these difficult economic times,” he said.

Costs will decline to about $50 billion next year, or about $12.5 billion a quarter, Citigroup said in a slide show prepared for the employee meeting and posted on its Web site. That compares with about $14.4 billion in the third quarter and $16.1 billion in the fourth quarter of 2007, when Mr. Pandit stepped in after the ouster of his predecessor, Charles Prince.

The head count will drop to 300,000 from about 352,000 as of Sept. 30 and 375,000 at the beginning of this year, according to the presentation. The overall reductions include 12,500 jobs shed with the pending sale of Citi Global Services Ltd., an Indian business unit that handles processing and other “back-office” services. Citigroup also is selling its retail banking operations in Germany, with about 5,600 employees.

Citigroup said it may shed another 8,000 jobs through the sale of more business units, which weren’t identified.

Mr. Pandit has been selling businesses that he considers “non-core” to the bank’s operations. Citigroup’s presentation said it remains committed to its “universal bank strategy,” which combines retail and commercial banking rolled up in a single institution with Wall Street businesses including trading, investment-banking, asset custody, brokerage and private wealth management.

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