Citigroup Forced To Cut 4,500 Jobs
Financial firms worldwide have cut more than 200,000 jobs this year alone, much higher than what it was last year and exceeding even the 2009 layoffs. Adding to the number is Citigroup, which is forced to cut 4,500 jobs because of low performing revenues.
The news came yesterday at an investor conference in New York, where Citigroup Inc. Chief Executive Officer Vikram Pandit announced plans to cut 4,500 jobs in the following quarters to reduce costs. As he said unprecedented market conditions and slumping revenue make this decision urgent.
Citigroup has recorded an increase of 74 percent in the third quarter, thanks to a $1.9 billion accounting gain. However if we don’t take into consideration the accounting figure, the bank’s revenue for Q3 dropped by 8 percent, to 18.9 billion. Pandit estimates that for the fourth quarter, ended December 5, the bank would post a $200 million negative CVA.
Pandit said: “Financial services face an extremely challenging operating environment with an unprecedented combination of market uncertainty, sustained economic weakness in the developed economies” which only add to “the most substantial regulatory changes we have seen in our lifetimes”. The CEO warned that these factors will “likely significantly affect the competitive landscape in the coming years”.
Since Vikram Pandit became CEO of Citigroup he cut more than 100,000 jobs. At the same time, he did try as much as possible to expand the business in emerging markets and over the first three quarter of 2011, Citigroup has opened 65 new branches in Asia and Latin America. He explained that “emerging-markets growth is expected to continue, fueled by population growth, the rise of a powerful consumer base in the middle class and a growing share of world trace”.
Although the CEO did not mention where the 4,500 job cuts will occur, he did say in October that Citigroup is closing the Equity Principal Strategies unit. Pandit also said that some of the job cuts will take place in the bank’s proprietary-trading operations due to regulations.
Nancy Bush, analyst with SNL Financial in Charlottesville, Virginia, explained for Bloomberg: “The 4,5000 is a drop in the bucket for them, particularly when you consider how big they are and their global scope”.