Citigroup Likely to Avoid ‘Massive’ Job Cuts, Gerspach Says
The company is more likely to cut jobs than add them while adjusting its workforce, Gerspach said today on a conference call with journalists. The New York-based bank employed about 261,000 people at the end of June, down from 263,000 three months earlier, according to data posted today to its website.
Citigroup is laying off about 5,000 workers as it adjusts to new trading regulations and clients take fewer risks amid the European sovereign-debt crisis, the company said in January. The bank, which seeks to cut 1,200 jobs from its securities and banking division, will consider more spending reductions in trading and investment banking if revenue doesn’t improve.
“You have seen expenses coming down in the business year- on-year, and we’ve now had two consecutive quarters of lowering expenses,” Gerspach said in response to questions from analysts. “But I’m not going to tell you that you should expect to see two more quarters of expense reduction coming out of securities and banking.”
Jamie Forese runs the securities and banking division, which includes trading, investment banking and corporate lending. Revenue for the first six months of 2012 rose 2 percent from a year earlier to $11.9 billion, excluding accounting adjustments. Expenses fell 5 percent to $7.28 billion.
“There certainly is a good element of headcount reduction that is contributing to the overall expense reduction,” Gerspach said. “We’re going to continue to look at that business and make sure that we’ve got it sized appropriately.”
Citigroup continues to cooperate with regulators examining whether banks manipulated benchmark interest rates such as the London interbank offered rate, known as Libor, Gerspach said. Investors shouldn’t infer that the outcome will be similar at every firm under scrutiny, he said. Barclays Plc (BARC)’s chief executive officer, Robert Diamond, stepped down after the bank paid a 290 million-pound ($453 million) fine.
“It’s not the case that you can draw conclusions about the regulatory consequences for any one particular bank,” CEO Vikram Pandit, 55, said. “We are a member of a number of interbank rate-setting panels, and we as well as other banks have received requests for information, and we’re cooperating with them.”
Citigroup rose 0.6 percent to $26.81 at 4:15 p.m. in New York after the bank reported a second-quarter profit that beat analysts’ estimates.
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