Citigroup Cuts 2,000 More Jobs in Securities Division

Citigroup Inc. will cut 2,000 more trading and investment-banking jobs as the collapse of the subprime mortgage market puts the biggest U.S. bank on track for its second-straight quarterly loss.

The reductions are in addition to about 4,000 disclosed in January, a person familiar with the plan said. They add up to about 10 percent of the staff in Citigroup's securities division, said the person, who declined to be identified because the bank hasn't formally announced the decision. Most of the cuts will take place by the end of March.

Wall Street firms have fired more than 30,000 employees in the last seven months as the U.S. housing market contracted and the price of mortgage-related assets plummeted. Citigroup has lost almost half its market value since October, costing Chief Executive Officer Charles Chuck Prince his job and forcing his successor, Vikram Pandit, to raise about $30 billion from outside investors.

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. Every financial services firm is on red alert.

Citigroup posted a loss of almost $10 billion in the fourth quarter, the biggest in its 196-year history, and analysts expect another loss this quarter. The company's shares climbed $2.09, or 10 percent, to $22.50 as of 4:10 p.m. in New York Stock Exchange composite trading. They're down 24 percent this year.

Pandit's Review

Pandit, who stepped in last December, says he's traveled as far as Warsaw, Istanbul and Seoul in a front-to-back review of the company's expenses and businesses. In January, the bank said it would take a $337 million after-tax restructuring charge to eliminate 4,200 jobs. Most of those were in the trading and investment-banking division.

Citigroup had 374,000 full-time employees as of Dec. 31. The company's Institutional Clients Group, which includes trading and investment banking as well as hedge-fund management, has about 60,000 employees worldwide.

The new round of cuts will be spread across offices in New York and London as well as smaller sites in Asia and Europe, the person familiar with the matter said.

Each year we identify the bottom 5 percent of performers in the Institutional Clients Group, and some number of these people leave the firm, the bank said in an e-mailed statement today. This year we will have a larger number of reductions as we continue to strengthen the business and lower our expense base.

Job Outlook

Citigroup doesn't expect significant additional job cuts this year in the investment-banking division, though that may change if markets worsen, according to the person familiar with the plans.

The job cuts were reported earlier today by the New York Times.

The Institutional Clients Group posted a $4.6 billion loss last year, compared with an $8.4 billion profit, or almost 40 percent of the total, in 2006. Earlier this week, Pandit installed longtime associate and former Morgan Stanley colleague John Havens as the group's new head. Prince had promoted Pandit into that position last October, when former trading chief Thomas Maheras quit.

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.