One of the largest single job culls of the current downturn was launched yesterday as Citigroup, the American banking group, announced plans to reduce its headcount by 52,000 in the next few months.
Staff at the bank, which employs 11,000 people in Britain, heard the news that 27,000 jobs would be axed from Vikram Pandit, the chief executive, after they were instructed to dial into a conference call. Another 25,000 employees will be transferred when its German company and Indian outsourcing business are sold to new owners.
Citi has already shed 23,000 jobs in the past nine months. However, further job-cutting was needed to meet Mr Pandit’s target of reducing the company’s headcount from its peak at the end of last year of 375,000 to 300,000 within months.
While the biggest casualty is likely to be the United States, where Citi operates one of the biggest retail banking networks, the UK will also suffer. As well as employing thousands of investment bankers in Canary Wharf in London, Citi operates the Egg credit card business employing 1,800 in Derby and also has a large administrative division in Belfast.
The mood outside Citi’s glass-fronted tower in Canary Wharf after the announcement was surprisingly stoic. “We knew it anyway,” a French worker said with a Gallic shrug.
One investment banker, with a nod towards the building 200 metres away across the dock that houses the remaining skeleton staff of Lehman Brothers, said: “It had been coming for a long time. Most people were resigned to it. Compared with some, we are sitting pretty.”
Another banker said: “Most people were expecting this – if you didn’t, then you probably shouldn’t be in an investment bank to be honest – so there was almost a feeling of relief.”
“Some of the jobs will just be dead wood,” one smoker said, before stubbing out his cigarette and returning to his office.
The financial services industry in Britain is facing up to a devastating round of job cuts as the crunch bites. Tens of thousands of City jobs have gone already, with Goldman Sachs, Royal Bank of Scotland, Morgan Stanley, Dresdner Bank and Merrill Lynch taking a knife to their headcounts.
The bloodletting is about to spread to retail banking, with at least 20,000 jobs expected to disappear when Lloyds TSB takes over HBOS.
The Citigroup job losses are expected to be achieved through a mixture of redundancies and natural leavers who will not be replaced. Last Friday hundreds of Citi staff in London were given their P45s as the result of a previous cost-cutting exercise.
Citi, which before the crunch was the biggest bank in the world, has been poleaxed by sub-prime losses and other difficulties, leading to losses of $20.3 billion (£13.5 billion) in the past year. Last month the US Government injected $25 billion to beef up its weakened balance sheet.
Citigroup’s latest cut is one of the biggest single corporate culls ever. IBM holds the record for the single biggest headcount reduction, when it announced plans to shed 60,000 employees in 1993.
Mr Pandit told employees that the bank has spent the past year “getting fit”, but it expected a “difficult” 2009 for its customers.
Shares of Citigroup slipped 19 cents, or 2 per cent, to $9.33 in afternoon trading. Last week shares in the company that Sandy Weill created in 1998 from the merger of Travelers Group and Citicorp fell to dollar single digits.
Andrew Cuomo, the New York attorney-general, criticised Citi for delaying its announcement on executive bonuses this year. The bank has said that it will make any decision after December 31; Mr Cuomo argues it should institute a bonus ban at once.
— Angry institutional investors have wrested one concession from Barclays as the price for reluctantly approving its controversial £6 billion capital-raising. The bank has privately agreed to put up its entire 17-member board for reelection next April. Normally, only one third of the board comes up for election each year.
Existing shareholders were furious that Barclays had snubbed them in favour of Gulf investors; however, they were reluctant to vote against the deal for fear of sparking a crisis.
Last night Barclays declined to comment on the plan to submit the entire board to a vote – a move that may be frowned upon by the Financial Services Authority because of the instability that such an election could precipitate. Pirc, the corporate governance campaign group, urged shareholders to vote down the capital-raising plan.
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