Citigroup Is Said to Be Planning 1,000 Job Cuts

[LiviaOlivia]

The New York Times
February 12, 2005
Citigroup Is Said to Be Planning 1,000 Job Cuts
By LANDON THOMAS Jr.

Citigroup plans to eliminate about 1,000 jobs at its corporate and investment bank, according to a person close to the company, the latest signal that the company is placing a renewed emphasis on cutting costs and bolstering shareholder returns.

The cuts underscore what seems to be a recurring theme at the big money-center banks: their investment banking departments are overstaffed relative to the profits they are generating.

~snip~

The job cuts come in the aftermath of regulatory investigations in Europe over a series of controversial bond trades carried out within the investment bank. While the job cuts were unrelated to the trading fiasco, Sallie L. Krawcheck, the bank's chief financial officer, said yesterday in a conference call with investors that corporate banking profits in Europe had fallen 29 percent in the fourth quarter last year. Although she did not directly link the profit setback to the bond trading problems, she acknowledged that the negative fallout over the trades did not help the bank's business in the region.

~snip~

The layoffs raise the prospect of a fresh round of job cuts on Wall Street, especially among the larger banks. Despite the rebound in the mergers and acquisitions market over the last months, an inconsistent trading environment in equities and fixed income - where these banks and others on Wall Street maintain large staffs - has caused them to reassess their abilities there. As smaller banks continue to register high returns on equity by maintaining a relatively narrow business focus, larger banks, the product of years of mergers, are struggling to increase efficiencies within their mammoth and unwieldy investment banking divisions.

~snip~

http://www.nytimes.com/2005/02/12/business/12citigroup.html?

[Tux]

1. Why not

Lower the pay of executives to say $200,000/year and let those workers have a job and still save money?

[UL_Approved]

2. Indicative of some big trends

When banks need to do layoffs, this represents economic trouble for that area where the bank resides.

When banks all over are laying off workers, then the whole country is in trouble. This is very disturbing for future trends in savings and investment.

[TexasLawyer]

3. Outsourcing

"The company is placing a renewed emphasis on cutting costs and bolstering shareholder returns." i.e., savings achieved through these layoffs will redound to the owners of Citigroup and those savings will not be redounding to the public in the form of lower prices for bank services.



12th Apr 2004
Citibank to absorb Indian outsourcing firm
Filed under: Main News— sushubh @ 9:19 pm

Citigroup is paying about $126 million to take full control of Indian IT services company e-Serve International. The banking giant had owned about 44 percent of shares in the Indian company through its Citibank Overseas Investment unit. It is now increasing its stake to 100 percent, Mumbai-based e-Serve on Monday informed the Bombay Stock Exchange, where it is listed.

The Indian company provides call center, transaction processing and data management services and has clients in 25 countries, including the United States, the United Kingdom and Australia. It has a staff of about 4,500.

The acquisition follows a similar move by IBM last week in the outsourcing sector. Big Blue agreed to take over privately held Daksh, India’s third largest back-office-services company, in a deal estimated to be worth between $150 million and $200 million. Daksh, which has 6,000 employees, offers call center services to 13 clients including Internet retailer Amazon.com.

Numerous U.S.-based corporations are turning to Indian companies to handle a variety of business activities such as help desks, customer service and claims processing, either through their own subsidiaries or third-party operations. They’re doing so to cut costs, but have drawn fire from politicians and trade unions because of job losses in the United States. The Information Technology Association of America trade group, however, has argued that so-called offshoring might actually help the U.S. economy.

http://news.techwhack.com/58/citibank-to-absorb-indian-outsourcing-firm/