Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
FOMC Minutes Reveal an Important Shift That’s Key for Gold, Too - 22nd Nov 19
Adaptive Predictive Modeling Suggests Stock Market Weakness Into 2020 - 22nd Nov 19
Why You Should “Follow the Money” on The Yellow (and Silver) Brick Road - 22nd Nov 19
This Invisible Tech Stock Threatens Amazon with 800,000+ Online Stores - 21st Nov 19
Crude Oil Price Begins To Move Lower - 21st Nov 19
Cracks Spread in the Precious Metals Bullion Banks’ Price Management System - 21st Nov 19
Why Record-High Stock Prices Mean You Should Buy More - 20th Nov 19
This Invisible Company Powers Almost the Entire Finance Industry - 20th Nov 19
Zig-Zagging Gold Is Not Necessarily Bearish Gold - 20th Nov 19
Legal Status of Cannabis Seeds in the UK - 20th Nov 19
The Next Gold Rush Could Be About To Happen Here - 20th Nov 19
China's Grand Plan to Take Over the World - 19th Nov 19
Interest Rates Heading Zero or Negative to Prop Up Debt Bubble - 19th Nov 19
Plethora of Potential Financial Crisis Triggers - 19th Nov 19
Trade News Still Relevant? - 19th Nov 19
Comments on Catena Media Q3 Report 2019 - 19th Nov 19
Venezuela’s Hyperinflation Drags On For A Near Record—36 Months - 18th Nov 19
Intellectual Property as the New Guild System - 18th Nov 19
Gold Mining Stocks Q3’ 2019 Fundamentals - 18th Nov 19
The Best Way To Play The Coming Gold Boom - 18th Nov 19
What ECB’s Tiering Means for Gold - 17th Nov 19
DOJ Asked to Examine New Systemic Risk in Gold & Silver Markets - 17th Nov 19
Dow Jones Stock Market Cycle Update and are we there yet? - 17th Nov 19
When the Crude Oil Price Collapses Below $40 What Happens? PART III - 17th Nov 19
If History Repeats, Gold is Headed to $8,000 - 17th Nov 19
All You Need To Know About Cryptocurrency - 17th Nov 19
What happens To The Global Economy If Oil Collapses Below $40 – Part II - 15th Nov 19
America’s Exceptionalism’s Non-intervention Slide to Conquest, Empire - and Socialism - 15th Nov 19
Five Gold Charts to Contemplate as We Prepare for the New Year - 15th Nov 19
Best Gaming CPU Nov 2019 - Budget, Mid and High End PC System Processors - 15th Nov 19
Lend Money Without A Credit Check — Is That Possible? - 15th Nov 19

Market Oracle FREE Newsletter

$4 Billion Golden Oppoerunity

Citigroups Survival in Doubt as 50,000 Jobs Cut

Companies / Corporate News Nov 17, 2008 - 01:20 PM GMT

By: Captain_Hook

Companies

Best Financial Markets Analysis ArticleIn yet another round of massive financial layoffs, Citigroup plans to cut about 50,000 jobs .

Citigroup's layoffs are the latest in a brutal round of job cuts across the financial industry. The cuts have been sparked by unprecedented losses due to bad credit investments, as well as the subsequent precipitous drop in banking and other financial-services business amid the worst economic conditions in 70 years.


Combined with earlier cuts of more than 20,000 positions, the latest job cuts will equal a 20 percent reduction in the bank's workforce from peak levels reached in the fourth quarter of 2007.

In October, fellow blue chip American Express Co. (AXP) announced major layoffs, unveiling plans to slash 7,000 jobs. So far this year, Goldman has said it would cut 3,200 jobs, Whirlpool dropped the ax on 5,000, Yahoo cut 1,000 positions, and Hewlett-Packard shed 24,000 jobs.

Town Hall Meeting

Citigroup gave a Town Hall Meeting Presentation in which it compared its capital position to other companies, mapped out loan loss reserves, expense reductions, and other items. Let's take a look.

Loan Loss Reserves



Citigroup doubled loan loss reserves. Will that be enough to keep up with the deteriorating economy? Unemployment is going to soar and along with it writeoffs in credit cards, home equity lines of credit, commercial real estate, consumer loans, etc. Citigroup is still behind the curve in writeoffs in my estimation.

Off Balance Sheet Holdings



Citigroup notes that the majority of $667 billion is unlikely to come on balance sheet yet presumes none of it will. I question the idea that Citi has no credit risk. Just how good are the counterparty guarantees for Citigroup to assume it has no risk on $667 billion? Also note that per an accounting rule change, Citigroup will be allowed to hide whatever risk there is, off the balance sheet and pretend that it does not exist at all. These risks need to be brought on the balance sheet and fully disclosed.

Targeted Reductions



For all the brouhaha over the layoff announcement, Citigroup's third quarter 2008 expenses are still higher than a year ago. If Citi hits is expense target of $52 billion for 2009, its expenses will be on average $13 billion per quarter or roughly where it was in 4th quarter of 2006 when the economy was humming along nicely (or so the mirage seemed).

Looking ahead from here, Citigroup is going to cut expenses by $1.4 billion per quarter (9.7%), and head count by 50,000 (14.2%) over the next 5 quarters (through the end of 2009). Is this enough? What does Citigroup do with 300,000 employees if it keeps selling off business units and assets?

World Class Leadership Team

Citigroup praised its wold class team on the presentation. Yes, there are some new faces but a lot of old faces too. But here is the final arbiter of how good that team is.

Citigroup Weekly Chart


The chart shows the market has increasing doubts about Citigroup's survival, or if it does survive, that it survives in one piece. And the icing on the economic cake is the loss of another 50,000 jobs even if it does survive.

By Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Click Here To Scroll Thru My Recent Post List

Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management . Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.

Visit Sitka Pacific's Account Management Page to learn more about wealth management and capital preservation strategies of Sitka Pacific.

I do weekly podcasts every Thursday on HoweStreet and a brief 7 minute segment on Saturday on CKNW AM 980 in Vancouver.

When not writing about stocks or the economy I spends a great deal of time on photography and in the garden. I have over 80 magazine and book cover credits. Some of my Wisconsin and gardening images can be seen at MichaelShedlock.com .

© 2008 Mike Shedlock, All Rights Reserved

Mike Shedlock Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

jan stahlie
22 Nov 08, 15:34
citi bust

It's all over for CITI. It is now the time to look fOr Goldman Sach as their saviour and officially merg into:

"SACHS (IN THE) CITI" so that we really can get screwed


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules