Citigroup began a round of layoffs among its London-based investment bankers this week after Chief Executive Vikram Pandit said that the bank will layoff 4,500 employees in its attempts to trim costs.
“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,” said Pandit. “These trends will likely significantly affect the competitive landscape in the coming years,” he added.
The cuts, which amount to less than 2% of Citigroup's approximately 267,000 employees, will be spread over several quarters, Pandit said at an investor conference Tuesday, which was sponsored by Goldman Sachs Group Inc. Citigroup will take a $400 million charge in the fourth quarter related to the layoffs, factoring severance and other expenses.
"It's a combination of market uncertainties, sustained economic weakness in the developed economies and, as well, the most substantial regulatory changes we've seen in our lifetime," Pandit said.
Citi’s cuts equate to about 2 percent of its 267,000 workforce. Citi cut thousands of jobs after heavy losses on toxic assets, due to which it had to be bailed out in 2008.
Citi's investments in emerging markets such as Brazil, China and India now account for more than half of the bank’s profit. Pandit says that these economies may expand at 6 percent a year through 2015, eclipsing developed markets, which may grow less than 2 percent.
“Developed economies are undergoing a long period of deleveraging of consumer, financial, corporate and government balance sheets, which will drive slow growth for years,” Pandit said. “By contrast, emerging-markets growth is expected to continue, fueled by population growth, the rise of a powerful consumer base in the middle class and a growing share of world trade,” he added.
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