Only the 1993 bloodbath at Big Blue, when IBM let go 60,000 people, was larger. Put another way, the number of jobs being eliminated at Citi is equal to the total amount lost throughout the entire U.S. financial services industry in 2006, according to Challenger Gray.
The cuts figure to have a severe impact on the New York economy, considering that Citi is the city’s second-largest private employer, behind only the New York-Presbyterian Healthcare System, according to Crain’s New York Business research. Citi had 27,000 staffers in the city in 2005, according to the most recent available data.
That number has likely shrunk since then because Citi had already laid off 23,000 employees, or 6 percent of its worldwide workforce, heading into Monday’s news that it would sack another 20 percent in what it called “the near term”—a phrase that seems designed to leave room for additional job cuts later.
In a presentation to employees Monday, Citi said it will wind up with about 300,000 staffers, or 75,000 fewer than it had at the end of last year. In doing so, it will shrink operating costs to about $50 billion a year. Citi had $63 billion of non-interest expenses last year.
Half the job cuts will be achieved through divestitures, such as the previously announced sale of Citi’s German banking business, and the rest are new cuts across the board.
New York state Attorney General Andrew Cuomo called the job losses “sad and disturbing” and urged Citi executives to follow the lead of Goldman Sachs Group Inc. and announce that they will not be receiving bonuses this year.
“It would send exactly the wrong message for Citigroup’s top brass to collect bonuses while investors, taxpayers and now Citigroup’s own employees suffer,” Cuomo said in a statement.
Bill Smith, chief executive of Smith Asset Management and a Citi shareholder who accurately forecast that the bank would need to sack 50,000 people, said investors may not be reacting more positively to the news because they believe Citi needs to go even further and lay off an additional 10,000 to 15,000 staffers to get costs in line with declining revenue.
“Citi is at a tipping point like a cow in a field at midnight,” wrote Douglas McIntyre on the blog 24/7WallSt.com, alluding to the company’s uncertain future.
Workforce Management's online news feed is now available via Twitter