Citi Poop

November 18, 2008 Citi Plans Asset Sales and Job Cuts By ERIC DASH The banking giant, Citigroup, which a decade ago set out to rewrite the rules of American finance, announced Monday morning that it would cut 50,000 jobs in the coming quarters, largely by selling assets. In a town hall meeting with employees, the bank also said that it was seeking to shore up its capital base and cut risky positions. In addition, the bank said that it would trim expenses by 16 percent to 19 percent to about $50 billion in 2009. The job cuts would be in addition to about 23,000 layoffs already this year. Most of the layoffs would come through attrition of the sale of units, the bank said, meaning the actual number of layoffs could be less at the bank. The cuts would leave the bank with about 300,000 employees, down from its peak of about 375,000 in the fourth quarter of last year. While the cuts will come across the company, investment bankers are expected to bear the brunt of the loses because senior managers have been asked to reduce expenses significantly. But back-office functions, like the bank.s legal and human resources divisions, are also expected to be hard hit. Once the most valuable financial company in America, Citigroup is withering along with its share price, which sank into single digits for the first time in a dozen years. As Vikram S. Pandit completes his first year as chief executive, many analysts say Citigroup has lost its way. Insiders say the company is racked by office politics at a critical moment in its history. Mr. Pandit is struggling to regain his grip on the company, which operates in scores of countries, after his attempt to buy Wachovia was upended by Wells Fargo. That misstep left Citigroup grasping for a new strategy to lure deposits and build up its branch network in the United States. Citigroup is also grappling with how to position its domestic consumer business, which faces rising loan losses and, analysts say, lacks the leadership and strategy it needs. Having lost Wachovia, Citigroup must now try to stitch together a group of small regional banks to catch up with Bank of America, JPMorgan Chase and Wells Fargo. Executives are looking at Chevy Chase Bank, a small lender in Maryland with $14 billion in assets, among several other institutions, according to people close to the situation. But assembling a large franchise could take years, and digesting deals has never been one of Citigroup.s strengths. -- ------------------------------ * Dr. James Ellingson, jellings(a)me.umn.edu * * University of Minnesota, mobile : 651/645-0753 * * Great Lakes Brewing News, 1569 Laurel Ave., St. Paul, MN 55104 *