The large US financial group Citibank has announced plans for about 52,000 new job cuts, on top of 23,000 redundancies already made this year. This makes a total of 75,000 job cuts in the organisation and represents a staff reduction of about 20%. About 300,000 jobs worldwide will remain in the bank "in the near term".
According to a spokesperson, the job cuts will come "from redundancies, the sale of units and natural wastage".
I cannot help but wonder what any bank needs 375,000 or even 300,000 (well paid) employees for, in an era when most of the world's money is electronic and only exists virtually, when stock market trading is computerised and automated - with pre-set cut-off points in case of extreme price drops - and when the number of traditional branch offices is at an all-time low (which is the case with all banks, not just Citibank).
The service staff in those branches also seems to get ever younger, which means two things: less experience and less pay. Personally I think that the overall very young age of bank service and trading staff is partly responsible for the current crisis.
A year ago, Citibank (with its huge and glamorous head office in New York) was the largest bank in the world. But how different things can be within a few months shows today's financial bulletin.
From being a world champion, Citibank dropped to 7th place in the international ranking, where four of the five largest banks in the world are now Chinese.
Citibank was established in 1912 as the City Bank of New York by a number of - mostly Jewish - merchants under the leadership of the former US Postmaster General Samuel Thompson.
After going through changes in ownership, the bank established its presence as the USA's largest bank in 1865, and soon it became the first US bank to set up operations overseas. Mergers and acquisition followed and the bank could only grow larger and larger.
However, the bank's many international engagements created a lot of criticism, and it was also blamed directly for "having played a major role in the Wall Street Crash" of 1929. Four years later, in 1933, Senator Carter Glass said during an investigation into the financial markets that the bank's then president Charles E. Mitchell "more than any 50 men is responsible for this stock crash".
More recently the group has faced one of the toughest economical periods, with the weakening US economy and the collapse of the 'subprime' mortgage market the main reasons for trouble.
In fact, much of the crisis was actually created by Citibank itself (again), as it was one of the main instigators of the 'subprime' mortgage market and one of the largest lenders in it.
Meanwhile Citibank has lost more than $ 20 billion in the past year and the bank's chairman and CEO Charles O. Prince III (left) had little choice but to resign in disgrace and rather hastily a year ago.
(He will, however, enjoy a comfortable retirement, as he left Citibank with a 'golden handshake' of $ 38 million in personal compensation.)
Citibank has reported four straight quarterly losses and some analysts believe the bank will not make a profit again until 2010.
Of the 52,000 newly announced job losses, about half are understood to be accounted for already, with the recently announced sale of Citibank's German retail banking business and the closing of an Indian outsourcing operation.
It is expected that the remaining 25,000 jobs will be gone by the first half of 2009, but Citibank declined to comment on the cuts.
"Underlying business remains strong and revenues have been stable," a spokesman said, adding that its capital position was also "very strong". However, business analysts and share prices tell a different story and I wonder if it is a general requirement for a banker to be a habitual liar, or if it just helps to do the job.
The share value of Citibank has dropped again by 6.2% after the announcement. It is down almost 70% since last year, and the bank's new chief executive Vikram Pandit has come under pressure from critics who have doubted his ability to turn around the company and weather the financial crisis.
However, Citibank is probably quite safe, as it is one of the nine financial institutions benefiting from the US government's bail-out programme.
The US Treasury announced last month that it would be providing cash injections worth $ 125 billion for the troubled financial sector, to be shared between Citibank, JP Morgan Chase, Bank of America, Goldman Sachs, Morgan Stanley, Wells Fargo, Bank of New York Mellon, State Street and Merrill Lynch. (And as soon a the announcement was made, Goldman Sachs paid $ 17 billion in 'bonuses' to its senior managers. One wonders what this was for. Perhaps a bonus for having successfully conned the clueless Bush administration into handing over even more billions of taxpayers' money...)
The Emerald Islander
According to a spokesperson, the job cuts will come "from redundancies, the sale of units and natural wastage".
I cannot help but wonder what any bank needs 375,000 or even 300,000 (well paid) employees for, in an era when most of the world's money is electronic and only exists virtually, when stock market trading is computerised and automated - with pre-set cut-off points in case of extreme price drops - and when the number of traditional branch offices is at an all-time low (which is the case with all banks, not just Citibank).
The service staff in those branches also seems to get ever younger, which means two things: less experience and less pay. Personally I think that the overall very young age of bank service and trading staff is partly responsible for the current crisis.
A year ago, Citibank (with its huge and glamorous head office in New York) was the largest bank in the world. But how different things can be within a few months shows today's financial bulletin.From being a world champion, Citibank dropped to 7th place in the international ranking, where four of the five largest banks in the world are now Chinese.
Citibank was established in 1912 as the City Bank of New York by a number of - mostly Jewish - merchants under the leadership of the former US Postmaster General Samuel Thompson.
After going through changes in ownership, the bank established its presence as the USA's largest bank in 1865, and soon it became the first US bank to set up operations overseas. Mergers and acquisition followed and the bank could only grow larger and larger.
However, the bank's many international engagements created a lot of criticism, and it was also blamed directly for "having played a major role in the Wall Street Crash" of 1929. Four years later, in 1933, Senator Carter Glass said during an investigation into the financial markets that the bank's then president Charles E. Mitchell "more than any 50 men is responsible for this stock crash".
More recently the group has faced one of the toughest economical periods, with the weakening US economy and the collapse of the 'subprime' mortgage market the main reasons for trouble.
In fact, much of the crisis was actually created by Citibank itself (again), as it was one of the main instigators of the 'subprime' mortgage market and one of the largest lenders in it.
Meanwhile Citibank has lost more than $ 20 billion in the past year and the bank's chairman and CEO Charles O. Prince III (left) had little choice but to resign in disgrace and rather hastily a year ago.(He will, however, enjoy a comfortable retirement, as he left Citibank with a 'golden handshake' of $ 38 million in personal compensation.)
Citibank has reported four straight quarterly losses and some analysts believe the bank will not make a profit again until 2010.
Of the 52,000 newly announced job losses, about half are understood to be accounted for already, with the recently announced sale of Citibank's German retail banking business and the closing of an Indian outsourcing operation.
It is expected that the remaining 25,000 jobs will be gone by the first half of 2009, but Citibank declined to comment on the cuts.
"Underlying business remains strong and revenues have been stable," a spokesman said, adding that its capital position was also "very strong". However, business analysts and share prices tell a different story and I wonder if it is a general requirement for a banker to be a habitual liar, or if it just helps to do the job.
The share value of Citibank has dropped again by 6.2% after the announcement. It is down almost 70% since last year, and the bank's new chief executive Vikram Pandit has come under pressure from critics who have doubted his ability to turn around the company and weather the financial crisis.
However, Citibank is probably quite safe, as it is one of the nine financial institutions benefiting from the US government's bail-out programme.
The US Treasury announced last month that it would be providing cash injections worth $ 125 billion for the troubled financial sector, to be shared between Citibank, JP Morgan Chase, Bank of America, Goldman Sachs, Morgan Stanley, Wells Fargo, Bank of New York Mellon, State Street and Merrill Lynch. (And as soon a the announcement was made, Goldman Sachs paid $ 17 billion in 'bonuses' to its senior managers. One wonders what this was for. Perhaps a bonus for having successfully conned the clueless Bush administration into handing over even more billions of taxpayers' money...)
The Emerald Islander
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