By Bloomberg News
Citigroup Inc. plans to fire 3,500 staff in the coming year, bringing total job cuts at the largest U.S. financial-services company to more than 4,000 since the start of 2001 as slumping financial markets bite into profit. The latest round of reductions, announced in a quarterly filing with the Securities and Exchange Commission, equal about 1.4 percent of Citigroup's 242,000 employees at the end of 2000.
The new cuts are on top of 1,200 jobs the company said earlier this year it would eliminate, although it has since sold a unit in which some of those were to occur. Citigroup, led by Chairman Sanford Weill, is paring its workforce as the financial-services industry tries to cope with its toughest year for profits since 1994. More than half of the cuts will be in the U.S., and Citigroup said by June it had fired about 750 people.
``If revenues for the brokerage group don't accelerate after Labor Day, we think more meaningful expense reduction in employment is likely,'' said Henry McVey, an analyst at Morgan Stanley Dean Witter & Co., which cut investment-banking jobs this year. ``The main focus should be getting the expense bases in line with the revenue opportunities.''
Citigroup said a $177 million charge taken in the second quarter will cover severance payments for the people fired.
About 2,150 of the positions to be eliminated are in the U.S., it said in the SEC filing.
The total job cuts will come to fewer than 4,700 because the company sold its Robinson-Humphrey Co. unit -- where firings were originally planned -- to SunTrust Banks Inc. this month, said Citigroup spokeswoman Leah Johnson.
Ms. Johnson declined to say which other countries would see firings. ``We don't have any current plans'' to make job cuts in Asia, said Richard Tesvich, a Citigroup spokesman in Singapore.
Citigroup has more than 18,000 employees in Asia including Australia and excluding Japan. In Europe, the company employs about 12,000 people. Weill kept Citigroup's profit expanding as the economy slowed by buying businesses and reducing costs. Citigroup's earnings per share have risen more than 25 percent each year since 1999.
This month, Citigroup bought Grupo Financiero Banamex-Accival SA for about $12.5 billion to expand in the faster-growing Mexican market and to help market products to Hispanic customers. Last month it purchased European American Bank, a New York-area consumer bank, for $1.95 billion.
Earnings growth is expected to slow this year, in part because of the weakened U.S. economy. Profit from operations in the second quarter rose 13 percent to $3.79 billion, or 74 cents a share, driven by earnings at consumer businesses. Citigroup operates consumer businesses through Citibank and Travelers insurance and, including its Salomon Smith Barney investment bank, the company operates in more than 100 countries.
The value of announced mergers this year through early August is down 46 percent to $1.06 trillion, compared with the same period in 2000, according to Bloomberg data. Initial public offerings in the same period are down 61 percent to $33.8 billion.
So far in 2001, firing employees has cost the company almost $300 million. The company took a $101 million charge in the first quarter to cover the costs of firing 1,200 employees, mainly in the investment bank.
Citigroup shares are down 3.8 percent this year. They fell 51 cents, or 1 percent, to $49.13 in trading on the New York Stock Exchange yesterday.