Citigroup Layoffs Can Leave upto 58,000 Jobless

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In an unfortunate turn of events, Citigroup revealed it’s plan to cut around 58,000 jobs to help the company adjust better to current economic crisis. These layoffs are planned in addition to 23,000 jobs already eliminated since January 2008. Overall CitiGroup laid off about 300,000 Jobs world wide since the January 2008.

Cost Cut is major concern as credit market squeezes. Citigroup is expected to save money by layoffs, sale of units and attrition as well as cutting day to day running expenditure. Vikram Pamdit, the CEO of Citigroup is notorious for taking such dramatic measures in difficult times. It will no doubt help Citigroup survive the troubled times by increasing profitability and likely to help the stock price as well. Citigroup’s stock fell into the single digits for the first time since bank was created in 1998 from the merger of Travelers Group Inc and Citicorp.

Shares of Citigroup are currently trading at $9.26 (I never saw it go below $50 since 2001)

Last year the bank lost about $20 billion mostly due to greedy betting on credit default swaps and other risky mortgage related securities.

the future outlook for citigroup is also dim as analyst believe that it is unlikely to make any profit before 2011. Pundits quote following as main reasons for failure of this banking giant.

1. Conservative Investment in Technology
2. Geographic Diversity (once considered as competitive edge)
3. Low Local Penetration
4. Brain Drain Due to Layoffs

For citibank credit card holders, this is bad news as Up to 20% of Citigroup customers could face a rate hike of up to 3 percentage points. Nothing can be worse as the holiday season is approaching…. Looks like it is not going to be a pleasant one for most of us.

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