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Anxiety high over Citigroup's decision on job cuts
Published on Tue, Nov 18, 2008 at 15:19 in Business section
Tags: Citigroup, Financial Crisis , Washington
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Washington: Citigroup, the US bank with the farthest global reach, announced the biggest round of job cuts since the financial crisis erupted last year, slashing 15 per cent of its workforce in a bid to return to profitability.
The cuts come on top of 23,000 reductions Citigroup had already announced and lag only the 60,000 layoffs by IBM in July 1993 as the largest ever, according to outplacement firm Challenger, Gray & Christmas Inc. After stock markets closed, the US Treasury said it had completed equity purchases in 21 more banks totaling $33.56 billion, including $6.6 billion in US Bancorp
People who are in the thick of things reacts to the Citigroup’s strategy.
Associate Editor at Forbes Jack Gage says, "I think one place this does make a big impact is across the backdrop of job losses already in the financial services sector with about 160,000 thus far globally, so this is increasing that by almost a full third and in a context of the current meltdown and the crisis thus far, that's certainly yet another leg down for job costs going forward."
Stocks Editor for Barron's Bob O'Brien says, "The losses that they've absorbed this year, some $20 billion, they're not going to be able to turn that around immediately. The securities business that they've been running for so long remains a very imperiled business, so I don't think that even with these massive head count reductions that they're undertaking, this is not a short-term fix. I think the problems that they're facing are going to be deep problems, widespread, and long-lasting."
A Citigroup employee says, "Well it's a tough situation for the markets. I think there's nothing else you can do, it's really tough now to get another job."
When asked what were the told? The employee reacted by saying, "I haven't been told anything actually, I'm going to the office right now."
Chief executive officer of Challenger, Gray and Christmas, John Challenger says, “This has been the era of the last two years where financial services has led the way. It's been the heaviest industry cutting jobs for the last two years, and it's still going. In October, it saw more cuts in the financial services sector than any other area of the economy. Now, we have this big job cut by Citibank in November suggest that more is to come. We're certainly not out of the woods.”
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