Citigroup and Goldman Sachs cut more staff

Source: Exec Digital USA

Date :23/06/2008 04:26:37

As the effects of the credit crunch linger, news is breaking that Citigroup and Goldman Sachs have eliminated thousands of roles.

America’s largest bank, Citigroup, is expected to cut up to 6,500 investment banking jobs, which equates to as much as 10 percent of its 65,000 headcount worldwide.

Citigroup announced in April that 9,000 jobs would go on top of the 21,000 eliminated in the past year, as it revealed further writedowns of US$15.2 billion, resulting in an overall loss of US$5.11 billion for the first quarter, and taking its total hit from the credit crisis to US$33 billion over the past nine months.

Tough choices

Apart from a few businesses in emerging markets, and its lucrative transactions services division, no major department of the investment bank will be spared as Citigroup yields the axe.

The cuts are the first taken by John Havens, who took charge of its institutional clients group, which includes the investment bank, in March. Havens is close to Vikram Pandit, the Citigroup Chief Executive, and believes that the credit crunch has made some of the investment bank’s businesses uneconomic, while others are failing to make enough money.

No longer required

Goldman Sachs, in comparison, has weathered the credit crunch a little better and last week announced a better-than-expected second-quarter profit of US$2.09 billion. However, it has not been immune from the downturn and is understood to have made jobs cuts as a result.

It has been eliminating 10 percent of the roles in the corporate fundraising and M&A divisions this year, and the latest round of redundancies began last week.

The new redundancies will add to the departures that follow Goldman’s annual performance review, which sees the worst-performing five percent of the staff leave.

Its headcount has fallen by about around 400 people between the first and second quarters.