Some 30 collateralized debt obligations (CDO) bankers have seen their jobs go only a week after Citi's new chief executive officer, Vikram Pandit, promised a proper shakeup of the bank plus cost-cutting measures.
Bankers working in Citi's structured-credit group have been fearing for their jobs after the sub-prime mortgage crisis caused the bank to announce minimum writedowns of $9 billion.
If the latest news is true, it would mean that Citigroup would be cutting a third of its CDO division workforce.
After investors have been wary of buying CDOs, due to sub-prime mortgage defaults, sales in the third quarter of the year fell by more than half compared to the same time a year ago, statistics from the Securities Industry and Financial Markets Association show.
"Issuance in structured credit, especially related to mortgages, is anaemic at best, with little likelihood of a recovery anytime in the near future,'' Andrew Davidson, president of Andrew Davidson & Co, warned Bloomberg. "My guess is you'll see more of these cutbacks across Wall Street.''
Citigroup was the biggest CDO underwriter for the first three-quarters of the year, responsible for $46.9 billion in securities, according to Thomson Financial.