New York Securities Lawyer Blog
On Wednesday, December 5, 2012, Citigroup announced that it would cut 11,000 jobs, of which 6,200 will occur in the global consumer banking group and 1,900 in the institutional client group, by the end of the year. These job eliminations were implemented in order to increase the cost efficiency of Citigroup as a result of its financial deterioration. This is the first wave of layoffs since Citigroup’s new Chief Executive Officer, Michael Corbat, replaced Vikram Pandit in mid-October 2012. In response to the announcement, Citigroup’s stock price rose approximately 7%. Corbat stated, “While we are committed to – and our strategy continues to leverage – out unparalleled global network and footprint, we have identified areas and products where our scale does not provide for meaningful returns.”
According to reports, Citigroup intended for the layoffs to take place prior to year-end to alleviate the need to remit severance and bonus payments to its former employees. It is believed that Citigroup timed the job cuts to purposefully avoid paying bonuses at the start of the 2013 fiscal year. Although the layoffs are expected to generate $1 billion pre-tax loss in the fourth quarter, it is reportedly expected to generate $900 million in profit in 2013 and $1.1 billion in profit in 2014.
Lax & Neville LLP has nationally represented individuals, securities industry employees and financial services professionals in employment matters and securities-related and commercial litigation, including bonus and severance disputes. Please contact our team of attorneys for a consultation at (212) 696-1999.