The sword will continue dangling over Citigroup's work force for awhile longer.
In the wake of speculation the biggest U.S. bank would unveil fresh plans to lay off tens of thousands, Citi's new chief executive, Vikram Pandit, says he's still working out how many heads must go.
"I have not yet finished analysis of the work I said I would (do) to position our businesses for the future," Pandit told investors on a conference call this morning. "I am continuing to do that and will report to you when I'm done." He added that a $539 million fourth-quarter charge for headcount reductions in markets and banking businesses is merely a "down payment on the productivity efforts we're working on," according to The Wall Street Journal's blog of the conference call.
Citi reportedly eliminated 4,200 jobs during the fourth quarter. Still, the company ended 2007 with 15 percent more employees than it had a year ago - of which 11 percent came from acquisitions, according to Chief Financial Officer Gary Crittenden. Fourth-quarter expenses, swelled by the staff reduction charge, grew 18 percent from a year earlier.
The WSJ blog also quoted Crittenden saying that "Many parts of the fixed income market such as CDOs have shrunk dramatically and we are not optimistic that they will regain a foothold in the market." And he said he believes U.S. consumer credit will continue to deteriorate.
The remarks followed Citi's fourth-quarter financial release that showed a $18.1 billion write-down of asset values and a net loss of $9.83 billion or $1.99 per share, compared with a profit a year earlier. Deducted from the top line, the write-down caused Citi's quarterly revenue to shrink 70 percent compared with a year earlier, to $7.22 billion. On top of the $18.1 billion loss from marking sub-prime and other assets down to current fair values, Citi also posted $5.41 billion in credit losses, for increasing loan-loss reserves and writing off uncollectible debts.
After the write-down, Citi ended the year with $37.3 billion of direct and indirect sub-prime exposure.
To shore up its capital ratios, the bank cut its stock dividend 41 percent and announced a total of $14.5 billion of preferred stock sales to the Government of Singapore Investment Corp. ($6.88 billion), the public (a $2 billion offering of new convertible preferred shares), Saudi Prince Alwaleed bin Talal and former Citigroup CEO Sandy Weill.
Separately, Merrill Lynch said it's selling a total of $6.6 billion of preferred stock to a group of sovereign and other foreign institutional investors, led by Korea Investment Corp., the Kuwait Investment Authority and Japan's Mizuho Financial Group. The securities pay a 9 percent dividend. Merrill is slated to release fourth-quarter results Thursday.