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Citigroup plans a leaner future, cuts All News Advanced

53,000 jobs
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By MADLEN READ, AP Business Writer – Mon Nov 17, 6:33 pm ET Send Share

Obama picks 3 financial regulators

NEW YORK – Citigroup, widely seen as the sickest Wall Street bank,
Saudis, Indians among Clinton foundation donors
will make some of the most severe cuts in the history of U.S. business
— 53,000 jobs — as it tries to slash costs and get back to basics Planner of Rwandan massacres convicted of
genocide
before it's too late.
Attorney general rejects Illinois gov.'s legal defense
The cuts, which will leave Citi about 20 percent smaller, are the latest help request
step in a stunning remaking of the American banking landscape since Regulators adopt new credit card rules
the financial meltdown, an upheaval that has included the demise of Audit: FBI agents billed $45k each in OT for
Play Video
storied investment houses and the conversion of others into three-month tours in Iraq
AP – How will Fed rate cut affect consumers,
Big 3?
commercial banks. Up to 25 Iraqis accused in Saddam party plot

Citigroup CEO Vikram Pandit met with employees Monday and laid More Top Stories »
Slideshow: Financial Crisis
out the bank's strategy in stark terms: "We are a bank. What does a
bank do? A bank takes deposits and puts them to work by investing ADVERTISEMENT
and making loans."
Video: Six Things to Know
About the Rate Cut ABC News Challenger, Gray & Christmas Inc., which has tracked downsizing
since 1993, said Citi's cuts are the second-most on record. IBM
announced in July it was cutting 60,000.
RELATED QUOTES
At its peak in 2007, Citi had 375,000 employees.
GS 78.76 -0.02
JPM 30.73 -1.13 About half the cuts are expected to come from selling off parts of the
MS 16.70 +0.20 business. The bank has already said it would sell Citi Global Services
UBS 13.48 -0.53 and its German retail banking businesses, and it plans to unload more,
WFC 31.01 +1.03 a spokesman said. The rest of the cuts are expected to come from
layoffs and attrition.

As investors digested that news, financial stocks had a bad day.

Citigroup stock fell 63 cents, or more than 6 percent, to $8.89. The
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Dow Jones industrials, nearing their lowest close since the financial
meltdown began in September, lost nearly 224 points to close at UK Business & Financial News
8,273.58. Latest financial news from the UK. In-depth
coverage updated daily.
The government invested $25 billion in Citigroup as part of the www.growthbusiness.co.uk
financial rescue package. On Monday, the Treasury Department Bilingual Finance Advisor
announced it had given another $33.6 billion to 21 banks in a second Immed. opportunity for experienced Bilingual
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Still, the Bush administration has told lawmakers it does not plan to
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use at least half of the $700 billion bailout fund, congressional officials Earn A $5,000 Or More In Your First Month Of
said. That would leave President-elect Barack Obama to decide how Business. Read My Story.
to use the money when he takes office in January. The Treasury GetRich.Blogdns.com
Department said no decision had been made on whether to spend the
AP – Graphic shows share of financial jobs in
U.S. employment and financial sector job cuts rest of the money before Bush leaves office.
since 1997; Featured
For Citi, the simple, leaner plan is a noticeable change from earlier in
the decade, when banks were making a huge chunk of their profits from complex structured-finance products The Week in Photos
based on risky debt, like subprime mortgages. Check out some of the best
photos of the week on Yahoo!
Now those revenues have all but dried up, and Citi is trying to extract itself from exotic debt instruments. News.

"The shocking thing is that the Wall Street business model, prior to September, is effectively gone. We don't
Financial Crisis
have any more independent investment banks," said Lee Pinkowitz, an associate finance professor at
Find out the latest news about
Georgetown University Business School.
Wall Street and how it affects you
Pandit told workers the bank was not giving up on investment banking, citing emerging markets as a place
that can deliver growth. But the riskiest investment banking businesses are now so slow they can't support

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Citigroup plans a leaner future, cuts 53,000 jobs - Yahoo! News http://news.yahoo.com/s/ap/20081117/ap_on_bi_ge/financial_meltdown

thousands of employees.
Education
As Pinkowitz said, the financial crisis took "what was muscle at one point and created fat."

Citigroup, which built up through rapid acquisitions over the past two decades, has long been criticized as too Moms Return to School
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"Why the heck do they need 350,000 people to start with?" said Robert Howell, a finance professor at career.
Dartmouth's Tuck School of Business. "It's always been way overstaffed. They should've woken up to that
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Ex-CEO Charles Prince was shown the door last November after Citi suffered big mortgage losses. He was started today.
replaced by Pandit, a former Morgan Stanley investment banker who, while well-respected as a banker, had
never led a public company. Nevertheless, most industry analysts have said Pandit's approach — to sell off
assets and cut costs — has been sound.
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"I guess we are all conscious of the economic situation the whole world is facing and just hope for the best
possible arrangements," Maria Francisca Del Orbe, who works at CitiGroup Treasury Systems, wrote in an
e-mail. "There is no need for us to start worrying now, but we should wait to see what happens."

And if the bank takes more hits due the worsening credit climate — not only in mortgages, but other
consumer debt like credit cards — it might have to keep cutting costs further. No Sting From Hedge Funds
OPEC Cut Folding CNBC
"Of the big banks, Citi is the sickest dog," Howell said. FOXBusiness

Of the big four U.S. banks, a group that also includes JPMorgan Chase & Co., Bank of America and Wells
Fargo & Co., Citi is the only one that has not made a recent major acquisition — which analysts say is one of
the few chances for growth right now. Citi is also the only big bank left that has posted four straight quarterly
losses.
Jobs-Less Apple China tries to move
In a research note Monday, Buckingham Research analyst James Mitchell wrote that the "the recent bout of FOXBusiness away from export-
expense cuts can get the company's expense levels in line with its peers." But he added that Citigroup has dependent economy
much greater exposure to total risky assets, more than double its peers. AFP
More Business Video »
Trying to boost confidence, Pandit told workers Monday that Citi's Tier 1 capital ratio, a key measure of
financial strength, is higher than its competitors'. Citi has also doubled its reserves in a year.
Finance
In comments to The Associated Press after a business forum in Dubai, Citi Chairman Win Bischoff did not
rule out possibility Citi executives would forgo bonuses this year.

"Watch this space," he said when asked about what will become of bonuses.
MARKET SUMMARY
On Sunday, Goldman Sachs Group Inc. said seven top executives were giving up cash or stock bonuses for Symbol Last Change
2008. UBS AG said it will stop making bonus payments to its chairman starting next year.
Dow 8,815.02 -9.32 -0.11%

New York Attorney General Andrew Cuomo said in a statement that Citi should follow Goldman Sachs' lead. Nasdaq 1,582.53 +3.22 +0.20%
S&P 500 906.69 +2.27 +0.25%
"After four consecutive quarterly losses, it seems only fair that top executives should shoulder their fair share 10 Yr Bond(%) 2.0660% -0.1240
of these difficult economic times," he said.

___ Bush considering "orderly" auto bankruptcy

Obama picks 3 financial regulators

AP Business Writers Adam Schreck in Dubai and Stephen Bernard and Tali Arbel in New York contributed to
Stocks vacillate amid lingering economic
this report.
fears

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