Top Firm To Cut 1,700 More Investment Banking Jobs
Some $16.9bn was written down or provided for in the first-quarter, including $6bn related to subprime mortgages, $3.1bn on leveraged loans, $1.5bn on exposure to monoline bond insurers and $1.5bn on auction rate securities. Citi's has now taken write-offs which total almost $39bn in the last 3 quarters. Despite this, the firm still has over $60bn in exposure to subprime mortgages and leveraged buyout loans.
Oppenheimer analyst Meredith Whitney said that 'Citigroup may not be in the intensive care unit, but it is still in the operating room and has a ton of tubes in it'. Overall, however, the results weren't as bad as many expected, and Citi CEO Vikram Pandit is thought to be doing a decent job. Bloomberg quotes Peter Kovalski, a portfolio manager at Alpine Woods Investments, who said: 'Pandit is doing what needs to be done, focusing on capital management, allocating capital to areas that he wants to grow and exiting businesses that he doesn't think are core to the overall franchise. The variable he has no control over (however) is the global economy'. Pandit said: 'We are not happy with our financial results this quarter, although they are not completely unexpected given the assets we hold'.
The latest announcement on job losses, however, is unlikely to be the last this cycle. The Daily Telegraph quotes Pandit saying that he will continue to look at shrinking Citi's cost base. He said: 'It (cost-cutting) won't end as long as I have this responsibility'. The Financial Times revealed last week that Pandit had told analysts that the company cost base could be reduced by as much as 20%, and he specifically mentioned cuts in IT and operations.