The banking sector continues to shed jobs, with the latest news coming out of the New York based banking giant Citigroup (NYSE: C). Rumors swirl that the firm’s trading and investment-banking division will eliminate 150 more jobs while shrinking bonuses by as much as 10 percent.
The dismissals are expected to occur before year end, and will affect businesses including equities trading and underwriting, said one of the people who requested anonymity because the plans haven’t been announced. The bonus pool for this year will shrink across the securities and banking division, which employs about 17,000 people, top performers are likely to be spared reductions.
As the slump in trading and investment banking revenue continues, Chief Executive Michael Corbat is tasked with guiding the firm through an environment of stiffer capital crisis, a prolonged debt crisis in Europe, and slow growth in the US. To do so, Corbat and his team will need to make radical changes to the lumbering giant. Although the latest cuts will come on Corbat’s watch, insiders say that the cuts for the third largest US bank were already in the works under Corbat’s predecessor, Vikram Pandit.
Danielle Romero-Apsilos, a spokeswoman for Citigroup, said in an e-mailed statement “We have been making targeted headcount reductions throughout the year in certain businesses and functions across Citi as part of our efforts to control expenses during the current environment.” As the financial service firms struggle to deal with the impending requirement of strengthening capital and cutting risk, firms across the Street continue to shed non-core assets and eliminate staff. Citigroup’s latest job cuts are part of a larger trend, earlier this year the firm announced 1,200 job cuts for the securities and banking division, which also included tech and ops staff. The 1,200 cuts announced under Pandit at the securities and banking division were part of an effort to reduce costs by $600 million. Compensation and other expenses fell by 5 percent to $10.8 billion in the unit for the first nine months of this year.
Citigroup continues to reinvent itself, though it has a long road ahead. Corbat took control of the firm back on October 16th, following the surprising exit of Pandit. The new CEO told analysts that day that he “will remain extraordinarily focused on our efficiency ratios and our overall expense levels.” Corbat has his work ahead of him, but slashing expenses are a step in the right direction to begin right-sizing the firm.
