The bloodletting continues unabated at Citigroup. The bank has announced layoffs of at least 10,000 employees in its investment bank and other divisions worldwide, according to an article by David Enrich and Robin Sidel in today’s Wall Street Journal. Citigroup’s senior management has ordered budget cuts to employee compensation of at least 25%. Managers can limit the number of layoffs by getting rid of higher paid bankers and traders.
Citigroup has shed approximately 23,000 jobs over the past year and, as of September 30th, had 352,000 employees. The latest round of layoffs is expected to be the deepest one yet. The goal is to shrink Citigroup’s work force to 290,000 employees.
According to the New York Times‘ Eric Dash, author of “Worst May Be Yet To Come for Citigroup,” also in today’s edition, the ax could keep falling. According to Dash’s sources, Citigroup could shed an additional 25% of its work force by the end of next year, reducing the total number of employees to 264,000.
The current round of layoffs will be, in addition to the investment bank, in the wealth-management division, and in the human resources, compliance, and legal departments. It is unclear whether cuts will be made in the consumer bank and credit card divisions.
In another effort to bolster its bottom line, Citigroup announced that it is raising interest rates for some credit card customers by an average of three percentage points. Given that Citigroup is one of the largest issuer of credit cards, this interest rate hike will ripple throughout the economy.
So, with more layoffs in the future and higher credit card rates for some customers, Citigroup still has a long way to go in its painful push to return to profitability.
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