Vikram Pandit, Citigroup (NYSE: C)'s CEO, is set to announce an even bigger round of job cuts this morning. (This round may supercede the potential 10,000 layoffs announced last Friday.) Will these cuts help revive Citi? No. But they may lower its cash burn rate by $50 billion in 2009. And investors are not impressed, sending its stock down 2.2% in pre-market.
Citi's 53,000 job cuts would represent a 14% cut -- yielding a total workforce of 300,000. Citi may also decide on canceling management bonuses -- a move led by Goldman Sachs (NYSE: GS). Let's hope that these bonus cuts affect the entire industry -- not just top management. After all, the Treasury has already given $159 billion to 24 leading banks and it would be a shame to see that money going to pay bonuses to people who got us into this mess.
Meanwhile, Citi is posed to raise rates on its credit card customers. Citi, which had 182.7 million open card accounts card customers in the third quarter, has told as many as 20% of them that their rates are being raised by an average of three percentage points. Credit losses in Citi's global card division rose over a third to $1.59 billion in the third quarter of 2008.
Now, thousands of Citi workers will pay with their jobs.
Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He owns Citigroup stock.
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Reader Comments (Page 1 of 1)
11-17-2008 @ 9:29AM
EMIL J KOVACH JR said...
"Citi, which had 182.7 million open card accounts card customers in the third quarter," The Question Is--HOW MANY Of These "Holders" Are Actually Carrying A Very High Balance, They Can NEVER Pay Off?--And What Is THAT Number?
EMIL J KOVACH JR
11-17-2008 @ 11:32AM
John said...
How can you heartless Bast*rds not give these guys their Multi-Million Dollar bonus??? After all they have spun the US in the worst financial position of our time for GREED!!!
I have an ideal, how about firing all of them!!! Oh I forgot, they protect their own!!!
11-17-2008 @ 3:58PM
no-way-to-pay said...
Been to Sears or Home depot lately Not very many shoppers and the credit cards are run by Citi
11-17-2008 @ 7:24PM
poor in texas said...
Why don't you get rid of the CEOs that have created this mess! Let them experience for a moment the hardships hard working folks experience on a daily basis trying to make ends meet.
11-17-2008 @ 7:49PM
pat me said...
citi would do better if they treated their customers better. i tried to return a broken item which i bought through citi dollars but they wanted me to pay for postage to send the broken item back to them. i closed my account and other family will be doing the same. they sent it out broken because the box had no damage to it but i must pay to send it back. way to go citi.
11-19-2008 @ 8:25AM
NABEEL said...
Citi!! Just Get Rid of Pandit ..things would be ease..
Since he's unable to manage ... this is how he's showing his efficiency...'do hell with you Pandit'.