Citigroup plans to cut 3,000 jobs


Citigroup Inc.is mulling over retrenching 3,000 workers as part of its cost containment measures, the Wall Street Journal reported following communication with people familiar with the plans. Among total layoffs, Citi plans to slash 900 jobs from its securities and banking division.

The move came on the back of turmoil in equity and debt markets. The ongoing economic and market instability has compounded the quandary.

Moreover, other cost curtailment measures include shedding of assets at Citi Holdings. In the third quarter of 2011, Citi Holdings revenues decreased 27.0% from the prior-year quarter to $2.8 billion.

However, Citi has been relentlessly trying to realign its balance sheet in accordance with the regulatory changes post meltdown to remain afloat. After a careful review of the business, which took into account current trends in credit and technology, management has decided to make strategic sense to move retail partner cards and a vast majority of its assets from Citi Holdings to Citicorp. The transition will be completed by the end of 2011.

Besides, earlier this month, the company announced an immediate reshuffling of responsibilities of the top managers in the emerging markets. Manuel Medina-Mora has been bestowed with added responsibility for global consumer and commercial banking as Mike Corbat became the sole CEO for Europe, the Middle East and Africa.

The plan suggests Citi’s strategy of generating more revenue in the emerging markets, such as Asia and Latin America in the midst of slow U.S. economic growth coupled with the divesting redundant assets in the Citi Holdings unit.

The company is significantly optimistic about the success of its reshuffling of management. We, however, remain hopeful for Citi to overcome all its concerns with the management reshuffling at least in the near-to-medium term.

Nevertheless, Citi is making every effort to save its own skin. It is initiating several actions to remain afloat. The job cut initiative explains Citi’s attempt to improve profitability amid revenue headwinds due to a weak economy and stricter capital requirements by regulators.

Source: Zacks