Citigroup Looking at Cutting More Jobs
Amid widespread concerns of layoffs thoughout the investment world, Citigroup Inc (NYSE:C) is strongly considering excising more jobs in 2012 than it has already, barring very significant gains in revenue this year in its ailing investment and securities divisions. The third largest U.S. bank announced last week that it was already implementing about 5,000 jobs cuts across the board; about a fifth of which were in investments and securities. Any new layoffs, it seems, will be directed specifically at the investment portions of the company.
Like many major banks and investment firms, Citi was devastated by the 2008 financial crisis and has sought in recent years to rebuild the investment portion of the company. Recent problems in Europe, however, have stymied, if not stunted, that growth. Combined with this is the fact that Citi only invested approximately $1 billion in the investment division last year. The company reported a very significant 29 percent decrease in its securities and banking revenues last quarter.
John Gerspach, Citi’s Chief Financial Officer, has stated that while the company is “strategically committed to securities and banking,” he went on to emphasize “that our current cost structure cannot be justified by our current revenues;” revenues he labeled as “disappointing and unacceptable.” Again speaking to concerns, Gerspach made it clear that though further cuts would not be made lightly or impulsively, “in the name of long term strategy” they would not be delayed if the company felt they were necessary. The investment unit of Citigroup handles all of its investment banking, hedge funds, and private equity transactions.
Citigroup has hardly been the only one that has been effected by slow investment growth and problems in the European zone. Morgan Stanley (NYSE:MS), one of Citi’s major rivals, made 1600 layoffs in January, mostly in its credit and equities divisions. According to an estimate from Reuters, job cuts across the industry have tallied at around 130,000 since the middle of last year, with many having come in the last month, situated to arrive before the companies make their annual bonus payouts.
So far, Citi has spent about $400 million in employee severance and, at least for the moment, employs 266,000 people.