) is on course to slash 300 jobs in sales and trading operations
worldwide, according to a report by
The Wall Street Journal
. This retrenchment of Citi comes as the company counters revenue
slouch with expense cut initiatives.
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Last year, Citi made a 5% cutback in its securities-and-banking
division. This resulted in 900 layoffs. Notably, the economic
slump has had a severe impact on the Securities sales-and-trading
business across several large Wall Street firms. With investors
growing wary of the European debt crisis as well as U.S. economic
outlook, this business has witnessed reduced volumes and lower
The onset of the current layoffs was triggered prior to the
departure of Mr. Pandit, the former Chief Executive Officer of
Citi. Further, with its new CEO, Michael Corbat, Citi remains
committed to continue with the efficiency improvement measures
and the expense management efforts.
In the midst of a challenging operating environment, lower
returns and stringent capital norms, many Wall Street banks are
trimming businesses to meet the aforementioned challenges. In
addition to Citi,
Bank of America Corp.
) is rightsizing its business and slashing jobs to address
revenue slump. Further, a number of European counterparts such as
Deutsche Bank AG
) have announced significant layoffs.
We believe that with a protracted economic recovery, bolstering
revenue has become a challenge. Therefore, sustaining and
elevating profitability through cost reduction measures including
layoffs is what several banks are looking at. Therefore, until a
recovery in revenue occurs, such actions are anticipated to
continue to help strengthen profit levels and capital ratios.
Citi currently retains a Zacks #3 Rank, which translates into a
short-term Hold rating. Considering its fundamentals, we also
have a long-term Neutral recommendation on the stock.