Citigroup Inc revealed plans to cut 52,000 jobs by early next year in Chief Executive Vikram Pandit's most dramatic move yet to restore profitability and bolster a sagging share price.
The cuts, announced Monday, will affect 15 percent of Citigroup's workforce and come on top of 23,000 jobs eliminated between January and September as souring economies and global credit conditions cause the U.S. bank with the farthest reach worldwide to retrench.
The new cuts will leave the second-largest U.S. bank with about 300,000 jobs worldwide, down 20 percent from the end of 2007 and roughly the same number it had at the end of 2005.
Cuts are expected from layoffs, the sale of units and attrition. Citigroup plans to slash expenses 20 percent from peak levels and spend $50 billion to $52 billion in 2009. That compares with $61.9 billion over the last four quarters.
Last week, Citigroup stock fell into the single digits for the first time since Sanford "Sandy" Weill created the bank in 1998 from the merger of Travelers Group Inc and Citicorp.
"If the past is any guide, Wall Street overshoots in terms of hiring and then overshoots when it's time to cut jobs," said Walter Todd, portfolio manager at Greenwood Capital Associates LLC, which invests $1 billion. "But it's not clear if the past is any guide here. It's a moving target, because the markets and the economy are in flux.
Shares of Citigroup, a Dow Jones industrial average (.DJI) component, fell 40 cents, or 4.3 percent, to $9.12 in morning trading on the New York Stock Exchange.
Citigroup's cuts are the deepest by any financial services company since the global credit crisis began last year.
Well over 100,000 jobs have already been lost at the largest banks and brokerages. In the last month, Goldman Sachs Group Inc began cutting 3,200 jobs, while Morgan Stanley (MS.N) said it will cut 10 percent of the jobs in the unit housing its investment banking operations.
Citigroup said it plans to make the latest job cuts in the "near-term." People at the New York bank said it expects to complete the reductions in the first couple of months of 2009.
