US lender slashes jobs as European debt crisis threatens banking revenues
executive officer Vikram Pandit will cut about 4,500 jobs in coming quarters as
he seeks to trim costs amid slumping revenue.
Citigroup will take
a charge of about $400m in the fourth quarter tied to the reductions, including
severance, Pandit, 54, said Tuesday during an investor conference in New York.
third-biggest US lender by assets, employed about 267,000 people as of Sept 30,
according to a quarterly filing.
Pandit is cutting
staff as the European sovereign-debt crisis persists and banks prepare for
regulations on minimum capital levels to take effect, threatening revenue from
trading and investment banking. Citigroup said in September it would limit
hiring to “critical” jobs to control costs.
“The 4,500 is a drop
in the bucket for them, particularly when you consider how big they are and
their global scope,” Nancy Bush, an analyst at SNL Financial, a bank-research
firm in Charlottesville, Virginia, said in a phone interview. “I’d be
suspicious that this may be the tip of the iceberg.”
Pandit has cut more
than 100,000 jobs since he became CEO in December 2007 through dismissals and
sales of distressed assets and businesses from the New York-based lender’s Citi
faces an extremely challenging operating environment with an unprecedented
combination of market uncertainty, sustained economic weakness in the developed
economies and the most substantial regulatory changes we have seen in our
lifetimes,” Pandit said Tuesday. “These trends will likely significantly affect
the competitive landscape in the coming years.”
worldwide have cut more than 200,000 jobs this year, up from about 58,000 last
year and 174,000 in 2009. Bank of America Corp. CEO Brian T. Moynihan said the
Charlotte, North Carolina-based lender plans to eliminate 30,000 jobs in the
next few years.
Some of the job cuts
at Citigroup will come from the firm’s proprietary-trading operations as
regulators seek to restrict banks from betting shareholder cash, Pandit said.
The bank said in
October that it’s closing the Equity Principal Strategies unit, a
proprietary-trading operation run by Sutesh Sharma.
Citigroup posted a
74 percent increase in third-quarter profit, aided by a $1.9bn accounting gain
that softened the impact of lower trading and investment-banking revenue.
Excluding the accounting figure, the bank’s revenue for the period fell 8
percent to $18.9bn.
business in its securities and banking operation also would record a loss of
about $300m tied to hedges if the quarter ended yesterday, Pandit said.
Hedges are bets that
firms make when seeking to curb potential losses on existing positions.