NEW YORK—Banking giant Citigroup Inc. announced Wednesday that the bank would cut around 4,500 jobs in the coming quarters as Chief Executive Officer Vikram Pandit attempts to slash costs in the middle of a trying economic environment for Wall Street.
“Financial services faces an extremely challenging operating environment with an unprecedented combination of market uncertainty, sustained economic weakness in the developed economies and the most substantial regulatory changes we have seen in our lifetimes,” Pandit said in a statement announcing the move.
“Our efficiency goal is to eliminate 3-5 percent of our expenses each year,” he added.
The cuts—which will be spread out over the next few quarters—are less than 2 percent of the company’s worldwide employee headcount of 267,000 staff.
Analysts have expected a staff cut from Citigroup, however, the final numbers are greater than the expected 3,000 in layoffs. In a conference call with analysts, Pandit said that Citigroup would take a $400 million charge in its financials in the fourth quarter to reflect termination costs.
As a whole, the financial industry has shed 200,000 jobs in 2011, according to data from Bloomberg. Investment banks have experienced lower trading revenues, and the ongoing sovereign debt crisis in the Eurozone has further depressed earnings, especially for Europe-based banks.
Although the market environment is an ongoing challenge, Citigroup should be more prepared than some of its competitors as the company is the most global of the big U.S. banks, with more than half of its net income coming from operations outside of the United States. The company has been dependent on its branches in emerging markets such as Brazil and India.
Bank of America Corp. CEO Brian T. Moynihan announced earlier this year that the Charlotte, N.C.-based bank would cut 30,000 jobs in the near future to combat sagging profits. Swiss banks UBS AG and Credit Suisse Group also announced layoffs recently.
Citigroup is the third biggest U.S. bank by assets. Shares of Citigroup (NYSE: C) initially fell on Wednesday following the news of the staff cuts, but rode a late-day market surge to close up about a quarter of a percent at $29.83. Citigroup shares are down 37 percent so far this year, trailing the overall financial services sector (down 26 percent in 2011) and the broader S&P500 (up 1.06 percent).
