Citigroup cuts 11,000 jobs

Tighten Your Belt - AusterityInternational financial conglomerate Citigroup announced on Wednesday, December 5th that the company will lay off 11,000 workers and take $1 billion in pre-tax charges to fourth-quarter earnings. Following the company’s official statement, Citigroup shares rose almost 4% so far on Wednesday morning.

Citigroup joins the ranks of big banks which have made major employee cuts in recent years: HSBC and Bank of America have cut 30,000 jobs, respectively, and UBS is set to cut 10,000 more positions from its rosters. Citigroup job cuts are focused in three sectors of the company, with 6,200 jobs eliminated from consumer banking, 2,600 jobs to be cut in operations and technology, and 1,900 jobs lost from the institutional clients branch. The cuts represent about 4% of the company’s total workforce. These actions represent an effort on the part of recently-appointed CEO Michael Corbat to streamline the third largest bank in the nation and to eliminate inefficiency.

“We have identified areas and products where our scale does not provide for meaningful returns,” announced Corbat. “We will further increase our operating efficiency by reducing excess capacity and expenses.”

In fact, Citigroup has predicted that the job cuts will lose the company money: about $300 million initially. However, Corbat then predicts that this loss will be balanced with a savings of $900 million in 2013 and about $1.1 billion each year after. He states, “These actions are logical steps in Citi’s transformation. While we are committed to – and our strategy continues to leverage – our unparalleled global network and footprint”.

Perhaps this new wave of drastic measures taken by businesses to remain above water will further motivate legislators to take the necessary steps to resolve the nation’s financial issues. With only weeks remaining before the impending fiscal cliff, these issues should be at the forefront of both legislators and constituent minds.

Posted by: Sophia Higgins

Sources: Forbes, Reuters, New York Times

Photo credit: Tighten Your Belt- Austerity @ photostream courtesy of Flickr user kenteegardin

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