Citigroup CEO Says Job Cuts Coming
Tuesday, December 06, 2011 - 05:14 PM
Citigroup Inc. is eliminating 4,500 jobs in its latest effort to cut costs. The bank will take a $400 million charge in the fourth quarter as a result.
Citigroup's CEO, Vikram Pandit, disclosed the job cuts at an investor conference Tuesday. The cuts represent about 1.5 percent of its global workforce of 267,000. Pandit said the cuts would be made over the next few quarters.
Other banks have also been cutting staff. Last month, Swiss lender UBS told investors it is downsizing its investment bank to 16,000 people by 2016 from the current 18,000 as the bank tries to reduce its exposure to risk. In September, Bank of America Corp., based in Charlotte, N.C., said it would cut 30,000 jobs over the next few years.
Pandit also warned that Citigroup will take a $500 million hit to revenue from an accounting-related charge related to the changing value of its debt.
Citi and other banks took accounting gains in the third quarter because the cost of its debt fell in the bond market. Since the bank could theoretically buy back its debt at a lower cost, accounting rules require that a gain be recorded.
Citi's accounting gain in the third quarter totaled $1.9 billion. Now, with corporate debt prices having recovered, Citi expects to take a hit to earnings in the fourth quarter.