Citigroup Inc., the biggest U.S. bank by assets, plans to cut more than 5 percent of staff in the securities unit to rein back expenses after U.S. subprime- mortgage related losses.
``Each year we identify the bottom 5 percent of performers in the institutional clients group, and some number of these people leave the firm,'' London-based spokesman Adam Castellani said in an interview today. ``This year we will have a larger number of reductions as we continue to strengthen the business and lower our expense base.''
Chief Executive Officer Vikram Pandit promoted former Morgan Stanley colleague John Havens this week to oversee the firm's trading, investment banking and hedge-fund units. The division posted a $4.6 billion loss last year, compared with a $8.4 billion profit, or almost 40 percent of the total, in 2006.
The New York-based company said in January it is cutting about 4,200 jobs and curbing year-end bonuses for top executives after $18.1 billion in writedowns on subprime home loans and bonds. The world's biggest financial firms have dismissed more than 30,000 workers in the last seven months and reported at least $195 billion in writedowns and losses.
``The business has gone away so you don't want to have an overloaded investment bank,'' Punk Ziegel & Co. analyst Richard Bove said. He rates the bank a ``buy.'' ``I think Citigroup is going to lose 30,000 people before this is all over.''
Citigroup plans to fire 2,000 investment bankers and traders by the end of the month, the New York Times reported earlier today, citing unidentified people close to the situation. Castellani would not confirm or deny the report or say whether the cuts are in addition to those announced before. The company employs more than 360,000 people globally.
Pandit has said the bank may cut more jobs than the 4,200 announced as he reviews costs. ``We continue to make plans'' to eliminate jobs, Pandit said on a conference call with analysts and investors Jan. 15.
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