Citigroup to slash 50,000 jobs worldwide

A day after media reports said Citigroup was planning to cut around 10,000 jobs worldwide, the US banking major today announced that it would cut up to 50,000 jobs – five times the number reported earlier.

New York-based Citigroup announced the layoffs after consecutive heavy losses in the past four quarters and with no end in sight for its current woes. (See: Citigroup may slash 10,000 jobs; directors deny move to replace chairman)

The cuts are expected in the near-term and are on top of the roughly 23,000 jobs already eliminated by the second-largest US bank between January and September. This would leave Citigroup with about 300,000 jobs worldwide, down 20 per cent from the end of 2007. These figures were released in an investor presentation on its website

It was not clear from the presentation what parts of the company the cuts would come from, but there was speculation last week that Citigroup was looking to layoff people in its investment banking and wealth management divisions.

Citigroup, whose shares have been battered amid the credit crisis, said it would reduce its expenses by 20 per cent to approximately $50-52 billion. The bank said it would make further job cuts to cope with the financial crisis. CEO Vikram

Pandit and other key executives had bought up 1.3 million shares to show confidence in the banking giant.

The cuts are Pandit's most dramatic move yet to restore profitability and bolster a sagging share price. Last week, Citigroup stock fell into the single digit for the first time since Sanford "Sandy" Weill created the bank in 1998 from the merger of Travelers Group Inc and Citicorp. Pandit has already declared his intentions to substantially trim the company's trillion dollar-plus portfolio in the near future. (See: Citigroup to sell off $400 billion of assets over next three years: CEO Vikram Pandit)

Citigroup shares fell some 24 per cent last week and have dropped 70 per cent since the start of the year, with the bank hit by hefty write-offs linked to the US sub-prime mortgage crisis. At present levels, the company has a market value of only $51.9 billion, barely twice the $25 billion of capital it received from the US Treasury department's bank bailout plan.

There has also been speculation that big changes could come at the top of the organisation. Last week, The Wall Street Journal reported that the company is considering replacing chairman Sir Win Bischoff. Citigroup's board sent a memo to all employees calling the report "irresponsible and completely inaccurate" however.