Citigroup Halfway Done With Staff-Cutting Plan
Citigroupis about half-way through cutting 10 percent of the 65,000 employees in its investment banking unit, a person familiar with the job cuts said Monday.
The unit, as previously reported, plans to lay off about 6,500 workers in the division, according to the person, who spoke on condition of anonymity because the job cuts are still under way.
"More than half of those have already been eliminated," the person told The Associated Press.
A major portion of the remaining job cuts are happening this week, The Wall Street Journal reported Sunday, citing people familiar with the matter.
In total, Citigroup has announced 13,200 job cuts this year as it tries to recover from bad investments on mortgages and leveraged loans that cut billions of dollars from its portfolio. Citigroup, which is the nation's largest bank by assets and employs more than 300,000 people worldwide, posted a $5.1 billion loss in the first quarter and a nearly $10 billion loss in the fourth quarter of last year.
Many bank analysts expect the company to report another loss for the current quarter. Chief Financial Officer Gary Crittenden last week warned that Citigroup would sustain more substantial write-downs on debt investments known as collateralized debt obligations, or CDOs, in the second quarter.
Crittenden also said there will likely be more write-downs related to leveraged loans and bond insurers, and that total credit costs would be higher in the second quarter than in the first due mainly to increased reserves in the mortgage portfolio.
Separately, the Financial Times is reported Goldman Sachs reduced the size of its investment banking division last week. In total, the company is expected to reduce the size of the division by 10 percent over the course of this year.
Goldman has been a relatively strong performer throughout the credit crunch and recently turned in an impressive second quarter earnings report.