Citibank to shed 52,000 jobs in global contraction

 

CITIGROUP'S IRISH business has declined to say whether any of its 2,200 staff in Dublin and Waterford will be affected by the 52,000 redundancies announced by the banking giant yesterday.

The job losses are the deepest cuts planned by a US bank since the credit crisis began last year.

The company, the largest foreign bank employer in the Republic, announced plans to reduce its global workforce by 14 per cent to 300,000, with the cuts falling "particularly heavily" in London and New York. This is in addition to the 23,000 job losses between January and September.

A spokeswoman for Citibank in Ireland declined to comment.

The bank is planning to reduce costs by 20 per cent after posting four straight quarterly losses, including a $2.8 billion (€2.2 billion) shortfall in the third quarter.

Analysts expect the US bank, the fourth largest based on market value, to post a loss of about $187 million in the fourth quarter.

Citigroup's shares shed 19 per cent in New York last week and have fallen 68 per cent this year.

Citigroup chief executive Vikram Pandit said he intended to reduce staff levels in the "near term". The redundancies are expected to be completed early next year.

About 2,100 of Citi's Irish staff are employed in the IFSC in Dublin, with the remaining 100 based in Waterford.

Aidan Brady, head of Citibank in Ireland, warned last month that the IFSC could face significant job losses due to consolidation in global banking and cautioned that costs in Ireland were "unsustainable" at a time of "massive cost reductions" in the industry.

Citigroup's Irish business has extended into Europe, with Citibank Europe - the bank's overall Irish company - becoming a headquarters for a number of Citi's businesses in eastern Europe.

The Irish operation has also been moving jobs to lower-cost locations in recent years, replacing them with higher-skilled jobs.

The Irish operation is focused on an area called "global transaction services", which Mr Brady has described as "one of the star performers" in the banking group.

Citigroup expects to reduce annual expenses globally to about $50 billion in 2008, compared to costs totalling $62 billion over the bank's past four quarters.

Meanwhile UBS said it had created a new pay system that could lead to senior bankers being fined or forced to repay part of their bonuses if they underperform when the bank posts heavy losses.

The bank hopes to eradicate the culture of paying huge bonuses and stock options on short-term results, and rewarding excessive risk-taking by bankers.