By Mike Caggeso
Citigroup Inc. (C) today (Monday) unveiled plans to cut more than 50,000 jobs in the "near term" and slash expenses by 20% to preserve capital as it faces a global slowdown that's expected to push well into 2009.
The cuts are on top of the 23,000 jobs eliminated so far this year. Chief Executive Officer Vikram Pandit plans to whittle the company's workforce down to 300,000. By the time Pandit puts down the machete, he'll have lopped off about 20% of the company's headcount since Citigroup's peak.
Just last week, Citigroup announced the release of 10,000 employees in addition to hiking interest rates an average of 3% for about one-in-five of its credit card holders.
Since the subprime market caved in last year, bank and brokerage firms around the world have shed nearly 160,000 jobs, Bloomberg reported. Citigroup's plan to let go 50,000 is the largest workforce reduction in the U.S. financial industry since it first started to unravel.
Since the crisis started in June 2007, Citigroup's shares have dropped like an anchor, falling more than 83%.
Still, that's not enough to shake Pandit's confidence that his executions will produce results and redeem the company's stock. Last week, Pandit and another top manager scooped up about 1 million shares between the two of them.at prices between $8.92 and $9.45, Dow Jones reported.
In Citigroup's presentation, the company pointed out that it has the lowest exposure to U.S. consumer mortgage market of the country's top four banks. Citigroup has $218 billion in U.S. mortgages, Bank of America Corp. (BAC) has $461 billion, Wells Fargo & Co. (WFC) has $340 billion, and JPMorgan Chase & Co. (JPM) has $302 billion.
Other banks are expected continue cutting jobs. The London Times reported over the weekend that JPMorgan is planning to cut thousands. Goldman Sachs Group (GS) is planning to cut 10% of its workforce.
Fidelity Investments, the world's largest mutual fund manager, plans to shed 1,700 jobs in the first quarter – in addition to the 1,300 it cut last week.
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