Citigroup Inc., the largest bank in America, announced this morning that it is axing 53,000 more jobs in the coming months as the banking giant struggles to steady itself after suffering massive losses from deteriorating debt.

The company said total headcount is being reduced by 20% from its peak of 375,000 at the end of 2007; the company had already announced in October that it was eliminating about 22,000 jobs from those levels.

Of course, this has a lot to do with the credit crisis. But Citi's chief Vikram Pandit has had plenty of skeptics long before this summer's market meltdown. Since Pandit took over a year ago, the company has lost 70% of its market capitalization -- making it worth less than many companies few people out there have heard of. That's not "Living Richly" as the company's ubiquitous ad campaign says.

One big worry about Citi these days is that its global banking model may be leaving the bank more not less vulnerable. As of June 30, Citi group has $830 billion in deposits - but only $126 billion is insured by the FDIC. The rest, nearly a half a trillion dollars, is held in foreign accounts and therefore is largely unprotected. The risk is that if the global financial landscape gets worse in the near future, foreign depositors abroad could begin fleeing Citi in droves in what would surely go down as one of the biggest bank runs ever.

While well-respected as an investment banker, Pandit never led a public company before taking Citigroup's reins and Wall Street is buzzing about whether Pandit and his top deputies will survive at the company for much longer.

Already, The Wall Street Journal reported last week, citing people familiar with the matter, that some Citigroup board members are increasingly dissatisfied with the company's performance and already are considering replacing Chairman Sir Win Bischoff. The board named Bischoff chairman in December after ousting former CEO and Chairman Charles Prince. Citi denied the report.

Another unsettled question: will Citi execs forgo their bonuses this year? Over the weekend, Goldman Sachs Group said seven top executives, including Chief Executive Lloyd Blankfein, opted out of receiving cash or stock bonuses for 2008.

For Pandit, only having to give up his bonus this year would probably be the nicest Holiday gift he could imagine.

categories: News

10:40 - November 17, 2008

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