Citigroup to cut 52,000 more jobs

ByABC News
November 17, 2008, 3:48 PM

NEW YORK -- "We have spent the last year 'getting fit'," CEO Vikram Pandit said to employees in a hastily-organized town hall meeting Monday morning at its New York headquarters. He went on to predict that "We will be the long-term winner in the industry."

Citigroup's reduction is the largest job-cut announcement since 1993, when IBM decided to cut 60,000 jobs, according to outplacement consultants Challenger, Gray & Christmas.

Citigroup's Monday cuts will affect 15% of its global work force, and come on top of 23,000 jobs that have already been eliminated between January and September. The company said it has reduced its headcount by a total of 20% from its peak of 375,000 at the end of 2007.

Pandit also said that he plans to lower expenses by 20%, and that the bank has already reduced its assets by more than 20% this year.

However, some investors had hoped for more fundamental change. "Cutting headcount seems like a fairly mundane strategy and doesn't seem like a strategic plan for what the business looks like going forward," says Walter Todd, a portfolio manager at Greenwood Capital Associates, which manages $750 million in assets in Greenwood, S.C.

Todd has cut his firm's exposure to financial companies stocks to just 5% from 30% in 2006, and sold off all his Citigroup shares in the last couple of years. Now, Todd wants to increase his financial companies holdings, but says "Citi is not at the top of our list, because of its own set of problems."

The Citigroup that Pandit inherited less than 12 months ago was a company that was already reeling from turmoil in the credit markets and a mortgage crisis and the sudden resignation of previous CEO Charles Prince. Investors have been calling for the break-up of Citigroup a mega bank with a diversified model formed by joining Citicorp and Travelers in 1998, under former CEO Sanford Weill. Critics say that the behemoth is too unwieldy, and its stock is down about 75% since then as the behemoth has lurched into many crises over the last 10 years.