Citi carves deep into Wall St. jobs

NEW YORK — With its losses mounting, Wall Street is cutting jobs faster and deeper than even pessimists had feared.

In one of the largest single rounds of layoffs on record for any industry, Citigroup said Monday it planned to eliminate 52,000 jobs, or 14 percent of its global work force.

While it already had announced its intention to do away with about half those jobs, news of the additional cutbacks — and the sheer size — underscored the flagging fortunes of the entire financial industry.

Not since the early 1990s has an American company announced such a sharp reduction in one swoop.

Few think the pain will end there for Citigroup or its rivals.

After years of breakneck growth during which the financial industry's profits and its pay assumed outsize roles in the nation's economic life, Wall Street is in the grips of its sharpest contraction in modern times.

The industry has shed more than 120,000 workers since the beginning of 2007, and many predict at least 240,000 more will go this year and next.

Citigroup has suffered through a year of losses, and its stock price has spiraled lower for months. It is hardly alone.

Given the gaping losses at many financial companies, and the hundreds of billions of dollars the government is spending to shore them up, executives are under pressure to reduce their pay and forgo annual bonuses. That is particularly so now that jobs are disappearing along with the profits.

Across Wall Street, the outlook for rank-and-file workers is particularly dire. In early September, Moody's Economy.com had predicted 45,000 to 65,000 financial workers in the New York area would lose their jobs by the middle of 2010. Now, Moody's puts that figure at 70,000 — and that assumes some workers find new jobs in a rapidly shrinking market.

The New York economy will feel Wall Street's pain, since the financial industry is one of the region's main growth engines and sources of city and state tax revenue. Its high wages have also propelled the region's housing market.

In New York, public officials are bracing for thousands of additional layoffs. Last month, the New York City comptroller raised its estimate of Wall Street job losses over the next two years to 35,000 from 25,000.

That is about one-third of the 165,000 private-sector net job losses the city expects as the pain at financial firms spills over to businesses that cater to the financial sector.

Parallels with '87

Ed Witherell, who advises Wall Street banks for the outplacement firm Right Management, likens the industry downturn to the one that hit Wall Street after the 1987 market crash.

The difference, he said, was that two decades ago, the stock market plunged quickly. "This is just a whole series of crash after crash after crash," he said.

The financial industry is just waking up to the severity of the market meltdown, said Charles Peabody, a longtime financial-services analyst at Portales Partners. "At first, the belief was that the problem was in fixed income," Peabody said. "Now, the problem has spread to all the other areas."

At Citigroup, executives had previously announced about 25,000 jobs cut, including ones shed through the sale of the company's Indian outsourcing operations and German banking franchise and prior layoffs.

But the bank stepped up its efforts Monday with plans to eliminate 17,000 workers in the coming months. It will also cut an additional 6,000 by divesting businesses in the future and could shed more jobs by not filling positions left open when employees voluntarily leave.

Most of those workers will be told of their fate by the end of the year.

The job cuts would be in addition to about 23,000 layoffs already this year and leave the bank with about 300,000 employees, down from its peak of about 375,000 in the fourth quarter of 2007.

Citi executives said there could be more layoffs ahead as they move forward with plans to restructure the company next year.

Cinching belt

As Vikram Pandit nears the end of his first year as Citigroup chief executive, he is redoubling his belt-tightening.

In a meeting with employees, he said Citigroup would trim expenses by as much as 19 percent, to about $50 billion in 2009. He also said the bank was seeking to shore up its capital base and cut risky positions.

After Citigroup announced its plan for accelerated layoffs Monday morning, Andrew Cuomo, the attorney general of New York, called for the company to refrain from paying senior executives bonuses this year, a step that Goldman Sachs said on Sunday that it would take.

"It would send exactly the wrong message for Citigroup's top brass to collect bonuses while investors, taxpayers and now Citigroup's own employees suffer," Cuomo said in a statement.

Pandit, however, has not decided on whether or not he would share the pain by turning down an annual bonus.

"Citi's board of directors will make the decisions about the structure and level of compensation after the end of the year," the bank said in a statement.