Citigroup to Cut More Than 5% of Securities Employees

Citigroup to Cut More Than 5% of Securities Employees

March 20 (Bloomberg) -- Citigroup Inc., the biggest U.S. bank by assets, plans to cut more than 5 percent of the jobs at its securities unit after record losses from the U.S. subprime mortgage market collapse.

Mortgage writedowns helped wipe out almost half of Citigroup's market value since October, cost Chief Executive Officer Charles ``Chuck'' Prince his job and forced the company to raise about $30 billion from outside investors. The world's biggest financial firms have fired more than 30,000 workers since September and recorded $195 billion in writedowns and losses.

Citigroup, based in New York, said in January it was cutting about 4,200 jobs and curbing year-end bonuses for top executives after $18.1 billion in writedowns on subprime home loans and bonds. Chief Executive Officer Vikram Pandit, who replaced Prince in December, has pledged to conduct a ``front-to-back'' expense review of the company,

``When it comes to Citi, what you're going to see for the next year is layoffs,'' said Jeanne Branthover, managing director of Boyden Global Executive Search in New York. While the cuts announced today are expected at this time of year as companies identify underperforming employees, the larger picture is bleak, she said.

``Every financial services firm is on red alert with what is happening with businesses,'' Branthover said. ``It's a very cautious time.''

More Cuts

Pandit has said the bank may cut more jobs than the 4,200 announced as he reviews costs. ``We continue to make plans'' to eliminate jobs, he said on a conference call with analysts and investors Jan. 15.

``Each year we identify the bottom 5 percent of performers in the institutional clients group, and some number of these people leave the firm,'' London-based spokesman Adam Castellani said in an interview today. ``This year we will have a larger number of reductions as we continue to strengthen the business and lower our expense base.''

Citigroup plans to fire 2,000 investment bankers and traders by the end of the month, the New York Times reported earlier today, citing unidentified people close to the situation. Castellani wouldn't confirm or deny the report or say whether the cuts are in addition to those announced before. The company had 374,000 full-time employees as of Dec. 31.

`Overloaded' Bank

``The business has gone away so you don't want to have an overloaded investment bank,'' Punk Ziegel & Co. analyst Richard Bove said. He rates the bank a ``buy.'' ``I think Citigroup is going to lose 30,000 people before this is all over.''

Pandit promoted former Morgan Stanley colleague John Havens this week to oversee the firm's trading, investment-banking and hedge-fund units. The division posted a $4.6 billion loss last year, compared with an $8.4 billion profit, or almost 40 percent of the total, in 2006.

Branthover said job losses at Citigroup and other investment firms will come throughout the year as the companies get more clarity on how the mortgage crisis and a slowing economy affect their businesses.

``Clearly no one is going to be shocked, and I think they're doing it for that reason,'' she said.

Citigroup which has lost 28 percent of its market value this year on the New York Stock Exchange, gained 72 cents to $21.13 in composite trading at 10:18 a.m.

BLOOMBERG