Citigroup Announces More Job Cuts

Citigroup [[c]], the largest US bank, announced Thursday that it plans to retrench more people in its securities operations in an effort to cut costs after subprime mortgage and credit problems led to a record quarterly loss. This job cut will be in addition to the 4,200 cuts announced in January by Chief Executive Vikram Pandit. According to the New York Times, citing people close to the situation, Citigroup plans to fire 2,000 investment bankers and traders by the end of March, and traders will be the ones who are the most vulnerable in this situation due to current market conditions. They report that the majority of employees who will be fired will be in the New York and London offices, though other markets in Europe and Asia will be affected. Although job losses are bad for those who get laid off, they are positive for the company’s stocks. Trimming of unnecessary expenses will free up more capital to invest in other businesses.

The Fed reported Thursday that investment houses borrowed an average of $13.4 billion daily over the past week from the new lending facility that was created on Sunday to allow these large financial firms get emergency loans directly from the central bank. This facility, similar to one available for commercial banks for years, got under way Monday and will continue for at least six months. On Wednesday, lending reached $28.8 billion, according to the Fed report. Although the report did not identify the borrowers, Goldman Sachs [[gs]], Morgan Stanley [[ms]] and Lehman Brothers [[leh]] said Wednesday they had already tapped into the Fed’s pockets.

Subscribe by RSS Subscribe by Email