Citigroup to cull thousands more jobs

8 January 2008

Struggling banking giant Citigroup is set to dismiss 32,000 more workers in a bid to cut costs.

Ten per cent of its workforce is expected to be sacked, although analysts say this will not keep the bank afloat.

Citigroup's new chief executive, Vikrum Pandit, may also decide the bank needs to sell off non-essential parts of its business.

Meredith Whitney, an analyst at CIBC World Markets, said that Citigroup would need to sell Smith Barney, the broker, at a price of around $25 billion to fix its funding problems.

Ms Whitney told The Times: "In these markets banks can only sell their best assets. The sale of non-core ones would not be material enough.

"To really reduce their leveraging, Citigroup have to sell a chunk of their mortgage or card portfolio, but there is no market for those assets. The only asset they could sell of any size is Smith Barney."

The broker has been eyed up by JPMorgan Chase in the past and Ms Whitney believes Credit Suisse would be interested.

Analysts predict that Citigroup will announce writedowns of $18.7 billion for the fourth quarter of the year and cut its shareholder dividend by 40 per cent.

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