Citi to Cut 20,000 Jobs, Faces Massive Writedown
Posted by admin under: Main Jan 14
According to CNBC, Citigroup could announce a writedown as high as $24 billion when it reports fourth-quarter earnings Tuesday, more than doubling previous estimates.
The bank’s board is also expected to meet tomorrow to discuss a possible dividend cut, or even an outright suspension, a move Citi had previously said it would not make, but one that could save billions a year.
Additionally, as part of the massive restructuring plan, the New York-based bank is expected to cut an estimated 20,000 jobs.
The struggling giant is also looking to raise as much as $15 billion from foreign and domestic investors, including Saudi Prince Alwaleed bin Talal.
Alwaleed, who assisted the bank during a crisis in the early 1990s, is Citigroup’s largest individual shareholder, holding a four percent stake in the company.
However, he is unlikely to raise his current stake beyond five percent to avoid regulatory headaches, the Journal reported.
Others have reported that Citi could also receive $9 billion from Chinese investors, and another $1 billion to $2 billion from The Kuwait Investment Authority.
“I don’t remember a time in history when so many banks were running around the world with hats in hand,” said Richard Sylla, a financial history professor at New York University’s Stern School of Business.
In November, Citi obtained $7.5 billion in new capital from The Abu Dhabi Investment Authority, just weeks after former CEO Charles Prince was ousted.
At that time, the bank said it expected writedowns of just $8 to $11 billion, a far cry from recent analyst estimates of $15 to $18 billion.
According to a survey conducted by Bloomberg, analysts anticipate Citi to report a fourth-quarter loss of $4.21 billion.
Shares of Citi climbed 45 cents, or 1.60%, to $28.56 Friday on news the company was in talks to acquire new capital.
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Source: Citi to Cut 20,000 Jobs, Faces Massive Writedown
Monday, January 14th, 2008 at 6:32 am and is filed under Main. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.