Citigroup to cut 10 percent of jobs: source
NEW YORK (Reuters) - Citigroup Inc plans to shed about 10 percent of its global workforce, a person familiar with the matter said Friday, as the bank tries to return to profitability and faces mounting criticism of Chief Executive Vikram Pandit.
The cuts could result in a loss of roughly 35,000 jobs, based on the bank's reported 352,000-person workforce as of Sept 30. The cuts will be on top of the 23,000 jobs Citigroup has already slashed this year.
Additional reductions would come from layoffs, the sale of units and attrition, said the person.
Citigroup spokesman Michael Hanretta declined to comment. Pandit in a memo said he will host a "town hall" meeting for employees on November 17 at 8 a.m. EST (1300 GMT), at which he plans to discuss the bank's plans, including "the money we spend."
Since replacing Charles Prince as chief executive in December, Pandit has made cost-cutting a top priority and has announced plans to shed $400 billion of assets.
He has, however, faced growing and sometimes withering criticism from investors and others for failing to implement a workable turnaround plan for New York-based Citigroup.
This week, the bank's shares fell below $10 for the first time since Sanford "Sandy" Weill in 1998 created Citigroup from the merger of Travelers Group Inc with Citicorp.
The bank's shares closed up 7 cents at $9.52 in New York Stock Exchange trading, making it one of only two components of the Dow Jones industrial average to gain on a day when U.S. stocks suffered broad declines. Earlier in the day, the stock dropped to $8.80 and has now lost more than two-thirds of its value from $29.44 at the beginning of the year.
Citigroup's market value is only about $52 billion, barely twice the $25 billion of capital it received from the U.S. Treasury Department's new bank bailout plan.
"The current strategy has been in place for more than a decade," said William Smith, chief executive of Smith Asset Management Inc in New York, which owns Citigroup stock. "I don't know how many more quarters we have to go through this."
TOUGH ROAD AHEAD
Like many rivals, the second-largest U.S. bank by assets faces growing credit losses now that many economies worldwide appear to be in recession.
But Citigroup is also constrained from growing at home, and Wells Fargo & Co last month derailed its attempt to buy Wachovia Corp and its $418.8 billion of deposits.
Citigroup has lost $20.3 billion in the last year, analysts expect it to lose money this quarter, and some analysts believe it may not be profitable in 2009.
The bank was cobbled together principally by Weill, who ceded control to Prince in 2003. But analysts believe Citigroup never invested enough in technology or to make the bank's disparate parts work well together.
And Citigroup's geographic diversity, including operations in more than 100 countries, is by some measures now a negative, as customers in Brazil, India and Mexico -- like many in the United States -- find it harder to keep up with their bills.
Pandit on Thursday bought 750,000 Citigroup common shares and 100,000 preferred shares -- the first time he has disclosed using his own money to buy the bank's stock. He joined Citigroup in 2007 when he sold his hedge fund, Old Lane Partners LP, to the bank for an estimated $800 million.
Citigroup has this week also tried to set aside reports of dissension among its directors with the performance of Pandit and the bank's chairman, Sir Win Bischoff.
"The board of directors and management are operating as one team," lead director Richard Parsons, who is also chairman of Time Warner Inc, said in a memo late Thursday to employees. "We are confident that the direction our management team has set is the right direction."
Citigroup disclosed on Friday that Pandit acquired 750,000 of the bank's common shares and 100,000 preferred shares on November 13. Its global head of investment banking, Edward Kelly, bought 100,000 common shares and global head of capital markets James Forese acquired 200,000 common shares.
(Reporting by Dan Wilchins and Jonathan Stempel, editing by Gerald E. McCormick and Andre Grenon)