Citigroup plans to make deep job cuts

Citigroup plans to make deep job cuts
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First Published: Tue, Nov 18 2008. 12 03 AM IST

Rightsizing: Citigroup chief executive Vikram Pandit. Bloomberg
Rightsizing: Citigroup chief executive Vikram Pandit. Bloomberg
Updated: Tue, Nov 18 2008. 12 03 AM IST
Citigroup Inc. chief executive Vikram Pandit vowed on Monday to keep shrinking the struggling financial giant, but his words did little to arrest a slide in Citigroup’s shares and drew poor reviews from some employees.
Rightsizing: Citigroup chief executive Vikram Pandit. Bloomberg
Pandit, speaking to employees at a town hall meeting at Citigroup’s Manhattan headquarters, said his goal is to reduce the company’s total workforce to about 300,000 employees, compared with its third quarter level of 352,000. About half of those planned reductions stem from previously-announced divestitures and other cost-cutting measures; the remainder will come via layoffs.
Pandit and his team decided late last week to hold the town hall as Citigroup’s stock price skidded into the single digits for the first time in 12 years. Meanwhile, some members of Citigroup’s board of directors, concerned about the company’s apparent strategic drift, have been agitating for greater oversight of the executive suite, according to people familiar with the matter.
The bulk of Monday’s 1 hour, 18 minute presentation focused on what Pandit described as Citigroup’s fundamentally sound financial position, despite four straight quarterly losses totalling more than $20 billion (Rs98,000 crore). He defended the company’s business model and trumpeted progress at weeding out risky assets. And he said that, thanks in part to a recent $25 billion infusion from the US government, “we look damn good in terms of capital”, according to someone at the meeting.
But some employees—some crowding into an auditorium to watch in person, others viewing it over Citigroup’s internal website, and still others dialling in to listen from locations around the world—were unimpressed.
Since becoming CEO last December, Pandit, a former finance professor, has frustrated some executives and directors with his academic style and lack of communication. Employees said Monday’s presentation fit that mold, dwelling on financial issues without doing much to pep up Citigroup’s dispirited troops.
Pandit’s main message to attendees was, “Let’s just keep doing what we’re doing,” according to people at the meeting, which was closed to investors, analysts and reporters. “It was terrible,” one employee said. “Given how much on edge people are, you would think he would say something to alleviate nerves, or at least just give to us bluntly. Instead, it was a technical presentation that seemed more appropriate for large investors and large clients to calm their nerves. Employees are part of the cost side of the equation.”
Citigroup’s chief financial officer, Gary Crittenden, also participated in the meeting and, along with Pandit, fielded a handful of questions from employees in the audience and around the world.
“I didn’t know what Gary was talking about,” another employee said. “It just got bogged down. It was flying over my head.”
Citigroup’s stock price, meanwhile, continued to tumble. Shares were trading at $9.25, down about 3%, in morning trade in New York.
Despite Citigroup’s problems, Pandit and Crittenden deployed an optimistic tone at the town hall, which featured a 26-frame slideshow. One slide was titled “Getting Fit— Fast!” Another explained how Citigroup is less exposed to US consumer mortgages than banks such as JPMorgan Chase and Co., Bank of America Corp. and Wells Fargo and Co.—despite the fact that Citigroup’s write-downs on mortgage-related assets over the past year have far eclipsed those of its rivals.
When it came to layoffs, Pandit didn’t disclose what parts of Citigroup would be hardest hit by the roughly 25,000 in expected cuts. The planned layoffs represent about 7% of the current workforce. In the past year, Citigroup has shed about 23,000 jobs.
Pandit only referred obliquely to inquiries about plans for executive bonuses. The issue is in the spotlight following Goldman Sachs Group Inc.’s disclosure on Sunday that it won’t award bonuses to its top executives.
“We are looking at compensation,” Pandit said, according to someone at the meeting.
THE WALL STREET JOURNAL
wsj@livemint.com
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First Published: Tue, Nov 18 2008. 12 03 AM IST