Citigroup, Goldman Said to Begin Firing Staff as Economy Slows

Citigroup, Goldman Said to Begin Firing Staff as Economy Slows


Nov. 6 (Bloomberg) -- Citigroup Inc. and Goldman Sachs Group Inc., faced with a weakening economy and the prospect of mounting losses, began firing workers as part of the firms' plans to cut more than 12,000 jobs, people with knowledge of the matter said.

Goldman, which converted last month from the biggest U.S. securities firm into a commercial bank, yesterday began telling about 3,200 employees, or 10 percent of its workforce, they were out of a job, according to one of the people who declined to be identified because the decisions were confidential.

Citigroup has been notifying staff this week who are affected by the bank's plan to discard 9,100 positions over the next 12 months, or about 2.6 percent of its headcount, another person said.

The ousted workers add to the swelling ranks of Wall Street's unemployed, their lives upended by the credit crisis. Both New York-based firms have already cut staff, and are among the banks and brokerages worldwide that have shed almost 150,000 jobs since the subprime mortgage market collapsed last year. Led by Chief Executive Officer Lloyd Blankfein, Goldman said in April it would fire more after culling about 1,500 underperformers. Vikram Pandit, Citigroup's CEO, shed 12,900 over the past year.

``We haven't hit bottom yet,'' said Henry Higdon, managing partner at Higdon Partners LLC, a New York-based search firm specializing in financial services. ``They have to adjust the size of their businesses to the realities, not only today, but what it's going to look like in the next two or three years.''

Spokespeople for the two firms declined to comment.

Weaker Growth

Goldman, which employed 32,569 people as of Aug. 29, may report its first quarterly loss next month since the company went public in 1999, according to analysts at Merrill Lynch & Co. and UBS AG. Stock market declines will cause Goldman to write down the value of equity stakes owned by the company in the fourth quarter that ends this month, the analysts said.

At Citigroup, Pandit has been trimming costs and unloading assets after the company reported four straight quarterly losses. Employees in the bank's sales and trading unit may be fired in the latest round of cuts, according to a person with knowledge of the matter. Citigroup's global workforce numbered about 352,000 at the end of September.

Citigroup, Goldman Sachs and rivals such as Merrill Lynch & Co. have been reducing staff as the revenue outlook dims for banks and securities firms.

Most major global stock indexes have dropped more than 25 percent this year, with the Standard & Poor's 500 down 35 percent and the Hang Seng Index down 47 percent. The International Monetary Fund's World Economic Outlook forecast last month that global growth will weaken to 3 percent in 2009, from 3.9 percent this year and 5 percent in 2007.

Girding for Recession

``Banks are cutting back, the economy is in a deepening recession,'' Jan Hatzius, Goldman's chief U.S. economist, said yesterday.

Citigroup, in the past year, has disclosed plans to eliminate 22,000 jobs, resulting in expenses of about $2.1 billion. Of the 22,000, about 9,100 remain to be cut over the next 12 months, Chief Financial Officer Gary Crittenden said on a conference call with analysts last month.

A person briefed on Goldman's plans said last month that the company, the only firm among Wall Street's five biggest to remain profitable throughout the credit crisis, would shed about 3,200 workers.

Merrill, which is being acquired by Bank of America Corp., is cutting about 500 jobs in its trading division as it girds for a recession, three people with knowledge of the plan said last month. The cuts amount to about 1 percent of New York-based Merrill's 60,900 employees.

Citigroup has disclosed plans during the past year to eliminate more jobs than any other financial institution, according to data compiled by Bloomberg. UBS, Merrill and Wachovia Corp. are among companies that have disclosed more than 5,000 job reductions.

BLOOMBERG