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Monday, November 17, 2008

Citigroup announces massive layoff due to financial market crunch and poor lending decisions

Citigroup (NYSE:C) the second largest bank by assets in America has said on Monday that due to the credit crisis plaguing Wall Street that they will be reducing employee levels down to 300,000 from the 352,000 workforce it has at the moment, shedding 52,000 jobs in the process.

The reports came as Citigroup posted an investors presentation on their website stating the move, it was only September that 23,000 employee’s of Citigroup lost their jobs. It has been highly speculated that the job redundancies will be in the banks Wealth management and investment banking division.

The New York bases bank has been one of the hardest hit by the financial crisis as it struggles to keep costs down to survive. Citigroup has lost more than $20 billion in the last four quarters largely to do with bad US mortgage debts.

Pressured by an almost-unprecedented financial meltdown and a gathering outcry over executive pay on Main Street, Goldman Sachs Group Inc. reportedly will pay no bonuses in 2008 to its top management -- a move that may set the precedent across a troubled Wall Street.
The Wall Street Journal reported Monday that the seven top Goldman executives, including Chief Executive Lloyd Blankfein, asked the board's compensation to grant them no bonuses, a request that was approved on Sunday.
The executives will only receive their base salaries of $600,000 each, said the Journal. A company spokesman said the executives felt the move was "the right thing" to do, according to the report.

A spokesman for Goldman told the newspaper, "While the firm has distinguished itself through many aspects of the crisis, we cannot ignore the fact that we are part of an industry that is directly associated with the ongoing economic distress."
Goldman has in recent years outperformed rivals on Wall Street, and its big bonuses have been closely watched -- and been the subject of much publicity -- inside and outside the industry.
The decision not to pay bonuses -- typically making up the bulk of a Wall Street executive's pay package -- could well set a precedent that others feel compelled to follow.
Several analysts have recently predicted that Goldman will post a loss for its fiscal fourth quarter ending this month. The loss would be a first for the compnay since going public in the 1990s.
The extent of any loss for Goldman will depend primarily on what happens in the world's stock markets during the rest of November.

Citigroup said Monday it planned to cut more than 50,000 jobs, the latest move by the struggling bank to cut costs in order to weather the credit crisis plaguing Wall Street

In an investor presentation on its Web site, the company said it would reduce its staff levels to approximately 300,000 employees. As of the end of September, the New York City-based bank had about 352,000 workers.

It was not clear from the presentation what parts of the company the cuts would come from, but there was speculation last week that Citigroup was looking to layoff people in its investment banking and wealth management divisions.

Ouch. The pain continues to spread on all economic fronts. It's too bad that when times were good for these corporations the money didn't trickle down as easily as the layoffs.

Mismanagement from the top equals layoffs for everyone else. With some of the latest goings on, it looks as if some of the executive level positions of these corporations will finally have to accept some responsibility for their company's failings. Fortunately for them, they will have plenty of money to last until their next gig.

Bonus anyone?

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