Citigroup confirms that it will cut 52,000 jobs by early next year, but UAE employees may be exempt from the job cull.
Citigroup to cut 52,000 jobs
NEW YORK // Citigroup has confirmed reports that it will cut 52,000 jobs by early next year in a dramatic move to restore the second-largest bank in the US to health as it combats mounting debt losses and sagging economies worldwide. The cuts announced on Monday by Vikram Pandit, the chief executive, will shrink Citigroup's work force by 15 per cent, and are in addition to 23,000 jobs eliminated between January and September. Citigroup plans to slash expenses by as much as 20 percent, and spend a total of US$50 billion (Dh183bn) to $52bn in 2009. That compares with $61.9bn over the last four quarters. The cuts will be global, affecting many regions and business lines, including the retail and investment banks, a person close to the matter said.
The group has 1,000 local employees, but a source close to the matter said the UAE offices were unlikely to be affected as emerging markets like the GCC are seen as having far greater growth potential. According to its website, Citigroup first opened an office in the UAE in 1964 in Dubai and currently offers corporate and consumer banking services. Speaking at a Dubai conference on Monday, Sir Win Bischoff, the chairman, said: "What all of us have done, and perhaps injudiciously, we've added a lot of people over ... this very benign period."
The cuts are Vikram Pandit, the chief executives' most dramatic move yet to restore profitability and bolster a sagging share price. Last week, Citigroup's stock fell into the single digits for the first time since Sanford "Sandy" Weill created the company in 1998 from the merger of Travelers Group and Citicorp. Mr Pandit became chief executive last December and has faced much criticism from investors and others for failing to implement a workable turnaround plan for Citigroup.
The New York-based bank has lost more than $20bn 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. Mr Pandit was holding a "town hall" meeting for employees Monday morning to discuss the bank's plans. Shares of Citigroup have fallen 68 percent this year, leaving the bank with a market value of only $51.9bn, barely twice the $25bn of capital it received from the US Treasury Department's bank bailout plan.
Citigroup was built principally by Mr Weill, who ceded control to Mr 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 and its $418.8bn of deposits. *Reuters with The National