Fallout: The Financial Crisis

Are job cuts the way out for Citigroup?

Jeremy Hobson Nov 17, 2008
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Fallout: The Financial Crisis

Are job cuts the way out for Citigroup?

Jeremy Hobson Nov 17, 2008
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TEXT OF STORY

Kai Ryssdal:
We left you Friday afternoon with this: an all-hands meeting at Citigroup scheduled for this morning, which we predicted would not be full of pats on the back and, “Hey, you guys are doing great.” By the time all the job cutting’s done — today’s 52,000 plus another 23,000 announced last month — Citigroup’s going to be 20 percent smaller than it was at the beginning of the year. Perhaps because of this: The number two bank in the country’s lost $20 billion in the past 12 months.
Marketplace’s Jeremy Hobson reports from New York.


Jeremy Hobson:
When so many jobs are on the line, you hate to hear the term “making it up as they go along.”
But, says bank analyst Bart Narter at Celent . . .

Bart Narter:
I see some major inconsistencies here.

After all, he says, it wasn’t even two months ago that Citigroup was trying to buy Wachovia.
Now it’s downsizing, big time.

Narter:
You can’t lay off that many people and continue to do everything that you’ve been doing before.

Narter says Citi will have to take a good hard look at which parts of its business it wants to focus on. And which it must sell or shut down. Jason Jennings is an expert on corporate productivity and author of “Think Big, Act Small.” He says what’s puzzling about Citi’s layoff announcement is that it’s the second in two months.

Jason Jennings:
Repeated layoffs inevitably lead to the good people saying to themselves “I’m not gonna stick around. I mean, it’s the security of my family at stake. I’m gonna look elsewhere for a more stable environment.”

Jennings says the last time he can remember layoffs on this scale was in 1993 when IBM slashed 60,000 jobs.
But he says there was a difference.
CEO Lou Gerstner didn’t follow the first round of layoffs with additional rounds.

Jennings: It was a one time fix, and I recall his comment very well, when he said, “The last thing we need is another darn vision in this company. We just actually have to get out there and meet with our customers and figure out how we can help them.”

The next thing Citi’s executives will have to figure out is what kind of bonuses they’ll get this year.
The New York Attorney General weighed in on that today, saying any bonus would send the wrong signal.

In New York, I’m Jeremy Hobson for Marketplace.

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