Citigroup to cut 32,000 jobs on fourth-quarter losses of $18.7 billion

by Gill Montia

Story link: Citigroup to cut 32,000 jobs on fourth-quarter losses of $18.7 billion

Citigroup, the world’s largest bank is expected to cut up to 32,000 jobs, in the face of rising losses. The figure amounts to 10% of the group’s workforce.

The bank, which will be reporting its full-year results on Tuesday of next week, is also rumoured to be considering the sale of non-core assets to raise capital.

Analystst are predicting that Citigroup will write down up to $18.7 billion in the fourth quarter of 2007, to cover losses on bonds backed by American sub-prime mortgages. The group’s dividend is expected to be cut by 40%.

Leading Wall Street banking analyst, Meredith Whitney, believes that the only way it can restore its balance sheet is by selling Smith Barney, its wealth management business, which is worth around £12.7 billion.

Ms Whitney, who works for CIBC World Markets, points out that: “In these markets banks can only sell their best assets.”

JPMorgan Chase has apparently previously expressed an interest in the broker and Credit Suisse is another possible bidder.

The potential for major job cuts at Citigroup comes against a gloomy backdrop in the US, with David Rosenberg, chief North American economist at Merrill Lynch, having recently stated that the country has already entered a recession.