* Several hundred jobs to go
* Bank readying 4,500 redundancies worldwide
* Bonus clampdown to accompany layoffs
LONDON, Dec 7 Citigroup began a
round of layoffs among its London-based investment bankers this
week, with jobs in advisory, equities and fixed income set to go
as the bank readies 4,500 redundancies worldwide.
There are likely to be "several hundred" job cuts across the
Europe, Middle East and Africa region, a person familiar with
the matter said, as part of the layoffs outlined by Citi Chief
Executive Vikram Pandit on Tuesday.
The bank has already told some staff they are at risk and
teams are set to hear on different days this week. Those in the
investment banking division, which includes merger and
acquisitions advisory, were told on Monday, two people familiar
with the matter said.
The equities division, one of the areas expected to be the
worst affected by cuts, and other areas such as foreign exchange
are expecting to hear Wednesday and Thursday.
"As part of our ongoing efforts to control expenses, we are
making targeted headcount reductions in certain businesses and
functions across Citi," a spokesman for the bank said.
A tough six months for bond and stock markets as euro zone
concerns spiralled is dragging on banks' revenues, and firms
across Europe, Asia and the United States have so far slashed
well over 120,000 jobs in big cost-cutting drives.
Citi's cuts equates to about 2 percent of its 267,000
workforce. About 10,000 of those staff are in London.
Many rivals are cutting up to 10 percent of staff. Several
Citi insiders said they expected further cuts, possibly next
year, even though the bank has been rehiring in the past 18
months after a particularly rough financial crisis.
Citi cut thousands of jobs after heavy losses on toxic
assets meant it had to be bailed out in 2008, and it had only
recently started adding again in Europe. Global headcount grew
throughout this year by about 7,000 people from 260,000 at the
end of 2010, according to company reports.
However, it is still far from Citi's 325,000 headcount the
end of 2006.
In EMEA, Citi has also revamped the structure of its
investment banking division, centering teams around clients
rather than the products they market.
Under regional investment banking co-heads James Bardrick
and Manuel Falco, the bank hired a stream of senior deal
advisers this year, including former Goldman Sachs financials
banker Basil Geoghegan, who has worked on the restructuring of
It also took on Martin Lovegrove, a former Standard
Chartered banker, to run its global energy business as it
bolstered its presence in some of the busiest M&A sectors. Pat
Guerin, one of UBS's European M&A co-heads, joined to advise
clients on asset sales.
As well as hands-on deals bankers, Citi took on advisers
such as Stuart Popham, a well-connected London lawyer and the
chairman of lobby group TheCityUK, to help strengthen its
relationships with big British clients.
Citi's top EMEA management has also changed recently, with
Mike Corbat, who had been running Citi Holdings -- the unit that
houses the group's unwanted assets -- set to take charge of the
region from next year.
BONUSES ON THE WANE
Aside from some of its senior investment bankers holding the
key to relationships and a handful of star performers on the
trading side, however, Citi will, like peers, be clamping down
on bonuses this year as it keeps a lid on costs.
People familiar with Citigroup's thinking told Reuters that
far more investment bankers were likely to get zero bonuses than
before -- something banks concerned about retaining staff have
But a paralysed job market and severe strains on costs as
investment banking income falters means many will be far more
ruthless than before. Headhunters and bankers predict that most
firms will lower bonus pools by up to 70 percent on 2010 levels.
One senior Citi insider said that only the key investment
bankers with relationships that brought in fees could be sure to
get a bonus. More junior staff or even hard workers and veterans
who did not directly bring in revenues would at best get much
reduced rewards, the person said.
"There is still a sense of entitlement among most staff when
it comes to bonuses, but any illusion about that is likely to be
shattered this year," another banker said.
The gap between star performers getting big payouts and the
rest of staff widened during the 2010 bonus round, and will be
far more pronounced this time around across all banks.
CEO Pandit said the latest cuts would be completed over "the
next few quarters" and the bank would take a $400-million charge
for severance and other expenses related to the layoffs.
Citi reported higher quarterly earnings in the third quarter
than a year earlier, helped in part by an accounting gain, but
its investment banking was hurt by turmoil in European markets.