Citigroup Plans New Round Of 'Massive' Job Cuts
Citigroup, Wall Street’s largest financial services firms, is planning its second round of large-scale layoffs in less than a year, CNBC has learned.
People inside Citigroup say the firm hasn’t set a target number of cuts from its roughly 320,000 employees. But people with knowledge of the matter have described the pending job reductions as "massive" and "large." The total number could reach as high as 45,000, these people estimate.
In a statement, Citigroup said: "We are engaged in a planning process in anticipation of our new CEO and our business heads are planning ways in which we can be more efficient and cost effective to position our businesses in line with economic realities. Any reports on specific numbers are not factual."
In April, Citigroup cut nearly 5% of its workforce, or 17,000 employees, a move by former Cheif Executive Charles Prince to reduce costs at the financial-services conglomerate. At the time, Citigroup’s stock price trailed rival Wall Street firms, like JP Morgan Chase because of its massive cost structure.
But in recent months, Citigroup has been hit with big losses from its exposure to the decimated mortgage-bond market. After initially announcing a $5 billion write-down because of mortgage-related losses, Citigroup announced that the write-down in profits could be as high as $11 billion.
Following the announcement of the higher-than-expected write down, Prince resigned from his job, and Citigroup’s board launched a search for a new chairman and CEO, while grappling with the possibility of whether Citigroup, which combines commercial and investment banking, should be broken up because it’s too big to manage and its model of cross-selling financial products to large and small investors doesn't produce the outsized returns of small investment banks like Goldman Sachs.
In the meantime, senior officials inside Citigroup are telling people that the firm is preparing for large layoffs. In some cases, the layoffs have already begun, with managers being told by their supervisors that they have to eliminate whole departments.
Earlier in the year, CNBC reported that Citigroup was considering cutting as many as 45,000 jobs before the firm came back with cuts of 17,000. It's worth noting that that Citi's share price barely moved after it announced the 17,000 job cuts, leading many people inside Citi to speculate that the number of cuts now could be much larger in order to boost the firm's floundering stock price.