50,000 jobs to go

Citigroup announces major cut

it has 6,000 employees in Md.

November 18, 2008|By McClatchy-Tribune

In the biggest round of layoffs seen to date in the battered U.S. financial sector, Citigroup Inc. said yesterday that it plans to cut about 50,000 additional jobs as part of an effort to stem huge losses sparked by bad investments and lending decisions.

The job cuts amount to the second-largest layoff, according to Challenger Gray & Christmas, since the tracking firm began keeping score in 1993. Only a 60,000 job-cut announcement from IBM in 1993 was bigger than Citi's disclosure yesterday.

Citi management also plans to reduce company costs in the near term by 20 percent and will continue to sell off troubled assets.

Shares of New York-based Citigroup, part of the Dow Jones industrial average, traded off more than 6 percent at $8.89.

Combined with earlier trims of more than 20,000 positions, the latest job cuts will equal a 20 percent reduction in the financial giant's work force from peak levels reached in the fourth quarter of 2007.

The layoffs are the latest in a brutal round of employment cutbacks across the financial industry. The reductions have been sparked by unprecedented losses due to bad credit investments, as well as the subsequent precipitous drop in banking and financial services amid the worst economic conditions in 70 years.

In one fell swoop, Citigroup is eliminating more jobs than the entire sector has cut over the four preceding months combined.

That's raising questions about how Chief Executive Vikram Pandit is running the major bank, as he was supposed to bring an outsider's perspective and some creativity to the financial services conglomerate.

A Citigroup spokesman said that while certain regions and businesses might have higher concentrations of job cuts, they would generally be across the entire company and around the world.

In Maryland, about 6,000 employees work across Citigroup's businesses, according to a spokeswoman, who did not have a breakdown of workers at its various divisions. Spokeswoman Liz Fogarty said the company did not have details on how yesterday's announcement would affect its Maryland operations.

According to figures from last year, about 1,000 workers were based at Baltimore-based CitiFinancial, the company's consumer finance business, and 2,400 employees work at its credit-card processing center in Hagerstown, which is Washington County's second-largest private employer, according to the state.

Citigroup's Maryland work force also includes employees in corporate offices, investment banking and those at Smith Barney brokerages.

In late 2005, Citigroup swapped its asset management unit for the brokerage business of Baltimore's Legg Mason Inc. The brokerage business was absorbed into Smith Barney.

According to Challenger Gray & Christmas, which tracks employment data and announcements of corporate job cuts, financial services firms have cut 129,150 workers through October 2008. Adding in Citigroup's job cuts, that total would jump to about 180,000.

In a presentation for a "town hall meeting" of all Citigroup employees, the bank - once the largest in the United States - said at the end of the September it employed 352,000 people, with its near-term head count target pegged at about 300,000.

Citigroup has lost more than $20 billion in the past year, and it has eliminated more than 20,000 jobs in that period.

In October, Dow component American Express Co. announced major layoffs, unveiling plans to slash 7,000 jobs.

Also in October, major sector layoff announcements came from National City Corp., which cut 4,000 even as it's in the process of being acquired by PNC Financial Services Group, as well as Barclays PLC, which laid off 3,000. Most recently, mutual fund giant Fidelity Investments said it has plans to cut about 3,000 jobs.

Outside of financials, other major firms have recently announced layoffs of 5 percent to 10 percent of their staff, including Hewlett Packard Co., Goldman Sachs Group, Whirlpool Corp. and Yahoo Inc.

And a handful of Goldman's top executives reportedly will forgo their 2008 bonuses in light of the volatility engulfing Wall Street.

For its part, Citigroup hasn't ruled out forgoing bonuses for its top management, Chairman Win Bischoff told the Associated Press.

Baltimore Sun reporter Hanah Cho and the Associated Press contributed to this article.

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