Citi mulls at least 10k pink slips; to raise credit card rates

Citi mulls at least 10k pink slips; to raise credit card rates

New York: Vikram Pandit-led Citigroup, the world’s largest bank, will hand out pink slips to at least 10,000 employees beginning this week and is also planning to raise its credit card interest rates as part of plans to return to profitability, a report said on Friday.

According to a report in the Wall Street Journal, Citigroup is embarking on “another huge round of layoffs and is raising interest rates on millions of credit card customers" as part of its push to become profitable again.

The fresh measures follow net losses of more than $20 billion over the past year and the subsequent efforts by Pandit, who became Citigroup’s CEO late last year, to stabilise the financial giant, the report added.

In October, Citigroup reported a net loss of $2.8 billion for the third quarter and said that its headcount was cut down by about 11,000 employees during the period.

In the first three quarters of this year, Citigroup cut down its workforce by about 23,000 persons.

Another report in the New York Times said that worst may be yet to come for Citi despite a year of losses, months of share price plunge and a $25 billion government help.

The company’s share price have lost nearly two-third of its value so far this year and figures among the top losers on the Dow Jones Industrial Average index.

The New York Times report quoted unnamed Citi executives as saying that the bank has announced plans to cut 40,100 jobs as of the third quarter and “still needs to hand out pink slips to 9,100 workers to meet its goals and bankers are bracing for much of the bad news to arrive early next week."

“While there are no formal plans for further job cuts, executives say it is possible that Citigroup could shed an additional 25% of its work force by the end of next year.

“Such a reduction would include layoffs, a hiring freeze and work force reductions related to businesses that the company is considering selling. Such a move would reduce the total number of employees to 2,64,000 from about 3,52,000 today," the report said.

Meanwhile, Citigroup’s board of directors has reiterated their full support to the firm’s chairman Sir Win Bischoff, amid reports saying that the board and some directors are mulling to replace the chairperson.

The report had noted that the possible replacement of Sir Win comes as the New York company’s board is adopting an increasingly assertive stance toward overseeing CEO Vikram Pandit and his tightknit team of executives.

“Those executives took power last December after Citigroup’s previous CEO, Charles Prince, stepped down amid mounting losses. Some directors have grown concerned that Sir Win, who is based in London, hasn’t been exercising adequate oversight," a Wall Street Journal report had said.

In another development, Pandit has bought shares worth $8.37 million in the company for the first time after been appointed as the CEO.

Pandit has bought 750,000 common stock worth $6.93 million and 1,00,000 preferred stocks valued $1.43 million, according to a regulatory filing.

These shares come on top of one million in restricted shares Pandit was awarded in December.