Citigroup Layoffs Reported to be as High as 45,000

November 26, 2007 No Comments »

Citigroup is planning serious cost cuts that could result in a substantial number of layoffs as the bank continues to feel the effects of mortgage-related writedowns.

CNBC reported this morning that unidentified sources within the company said the layoffs, which could number as many as 45,000, would occur over the next two months.

Just last week, Goldman Sachs analyst William Tanona downgraded Citi and said the company could write down as much as $15 billion in mortgage-related losses over the next two quarters.

Tanona cut Citigroup’s price target to $33 from $48, and his profit-per-share forecast to $3.80 from $4.65 in 2008, and to $4.60 from $5.20 in 2009.

He also warned that the bank may need to cut its 54-cent dividend or look for other sources to improve capital levels.

During the third quarter, Citi’s profit fell 60 percent thanks to $5.9 billion in credit and trading losses on loans and mortgage-backed securities.

The mortgage lender and banking giant is still looking for a new CEO to replace Charles Prince, who stepped down on November 4th after the company announced a looming writedown of at least $8 billion in the fourth-quarter related to bad mortgage investments.

The largest U.S. bank could be facing its first quarterly loss since 1998.

Citigroup is also facing scrutiny to modify loans that it acquired through the purchase of the loan-servicing unit of ACC Capital Holdings., which services roughly $45 billion in subprime mortgages.

Shares of Citi, which have lost about 44 percent of their value this year, were off $1.06, or 3.34%, to $30.64 in midday trading on Wall Street.

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