Citigroup To Incur $400 Million Cost To Cut 4,500 Jobs

Citigroup Inc will record a $400 million charge for severances and other layoff-related expenses in its fourth quarter this year, as the company embarks on its latest effort to cut costs by laying-off 4,500 employees worldwide.

Speaking at the Goldman Sachs Financial Services Conference on Tuesday, Citigroup Chief Executive Vikram Pandit told investors that the cuts would be completed over “the next few quarters” and would come from a range of its businesses.

Citigroup Inc will record a $400 million charge for severances and other layoff-related expenses in its fourth quarter this year, as the company embarks on its latest effort to cut costs by laying-off 4,500 employees worldwide.

Speaking at the Goldman Sachs Financial Services Conference on Tuesday, Citigroup Chief Executive Vikram Pandit told investors that the cuts would be completed over “the next few quarters” and would come from a range of its businesses.

“Financial services faces an extremely challenging operating environment with an unprecedented combination of market uncertainty, sustained economic weakness in the developed economies and the most substantial regulatory changes we have seen in our lifetimes,” said Pandit, as quoted by Bloomberg. “These trends will likely significantly affect the competitive landscape in the coming years.”

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[quote]“We’re just making sure that we’re structurally in line with the regulatory changes and [the way] the world’s going,” added Pandit, as quoted by the Financial Times. [/quote]

Citigroup had 267,000 employees on its book by the end of its third quarter this year. More than 100,000 jobs have been cut in the company since the 2008 financial crisis, with the latest cuts expected to affect about 1.7 percent of its current workforce.

The hardest hit jobs are likely to come from Citigroup’s back-office and investment banking operations, which has suffered from a slowdown in trading volume amid the turmoil in Europe. According to Pandit, some of the job cuts will also come from the firm’s proprietary-trading operations with regulators seeking to restrict banks from betting shareholder cash.

In September this year, the company announced that it would be limiting hiring to just “critical” jobs in order to control costs. Apart from the expense of job cuts, Citigroup will also take a $500 million hit to its revenue in the fourth quarter from an accounting-related charge related to the changing value of its debt.

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Still, the company managed to post a 74 percent increase in its third-quarter profits, thanks to a $1.9 billion accounting gain that softened the impact of lower trading and investment-banking revenue. Excluding the accounting figure, the bank’s revenue for the period fell 8 percent to $18.9 billion.

According to Pandit, Citigroup’s expense reduction program has thus far generated $1.4 billion in savings this year, nearly 4 percent of the bank’s $37.72 billion of operating expenses in the first three quarters./