Business | Banking
Citi to cut 9,000 jobs as losses persist
Citigroup Inc posted its second straight quarterly loss on Friday, hurt by more than $16 billion of write-downs and costs related to credit losses, and said it will cut another 9,000 jobs.
- Reuters
- Published: 00:33 April 19, 2008
New York: Citigroup Inc posted its second straight quarterly loss on Friday, hurt by more than $16 billion of write-downs and costs related to credit losses, and said it will cut another 9,000 jobs.
Though the $5.11 billion first-quarter loss was larger than expected, analysts and investors expressed optimism that the largest US bank and its new chief executive, Vikram Pandit, were taking necessary steps to move past credit problems and drive down costs.
"It's a cathartic quarter," said Arthur Hogan, chief market analyst at Jefferies & Co in Boston. "Vikram Pandit is coming in and making pretty big changes." Citigroup's net loss totalled $1.02 per share, and compared with a year-earlier profit of $5.01 billion, or $1.01 per share. Revenue fell 48 per cent to $13.22 billion.
Analysts, on average, expected a loss of 96 cents per share on revenue of $14.35 billion.
"We're not happy with our financial results this quarter," Pandit said on a conference call. Nevertheless, he said his confidence in Citigroup's future is "extremely high."
The job cuts are in addition to 4,200 announced in the previous quarter. Citigroup said it ended March with about 369,000 employees.
Focus
Pandit is trying to focus on stronger businesses and on cutting costs, including jobs, after years of underinvestment and questionable risk management left New York-based Citigroup bearing the full brunt of the global credit market crisis.
In the last two weeks, Citigroup has said it was selling its Diners Club International credit card network and most of its North American commercial lending and leasing business. Expenses, meanwhile, fell two per cent from the fourth quarter.
"Vikram Pandit was always going to shake the trees and get every skeleton out of the cupboard imaginable, which is what he's done," said David Buik, market strategist at Cantor Index in London.
Citigroup has lost close to $15 billion in the last two quarters, and has suffered more than $46 billion in write-downs and increased credit costs since the middle of 2007.
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