BOSTON (AP) — Shares of Citigroup fell in premarket trading on Wednesday after the bank said it would eliminate 4,500 jobs, far more than expected, and take a $400 million charge in the fourth quarter.
CEO Vikram Pandit disclosed the plans at an investor conference Tuesday, nearly three weeks after media reports suggested the New York bank would cut 3,000 or more workers.
The job cuts represent about 1.5 percent of Citi's global workforce of 267,000. Pandit said the cuts would be made over the next few quarters.
Citi's investment banking division has not been immune to the roiling global financial markets and is just the latest to announce job cuts.
Swiss lender UBS AG told investors this month it was downsizing its investment bank and shrinking that division's staff as the overall bank tries to reduce risk. The bank is trying to recover from a $2.3 billion rogue trading loss.
In September, Bank of America said it would be slashing 30,000 jobs as part of an effort to reverse a crisis of confidence among investors.
When Pandit was first hired by Citi in 2007, the bank had 375,000 employees. That number has been whittled down, in part through the spinning off of units the company doesn't consider central to its business.
Pandit on Tuesday also warned that Citigroup will take a $500 million hit to revenue from an accounting-related charge related to the changing value of its debt.
Citi and other banks took accounting gains in the third quarter because the cost of their debt fell in the bond market. Since banks could theoretically buy back debt at a lower cost, accounting rules require that gains be recorded.
Citi's third-quarter accounting gain totaled $1.9 billion. Now, with corporate debt prices having recovered, Citi expects to take a hit to earnings in the fourth quarter as a result of the job cuts.
Before the latest job cuts were announced, analysts surveyed by FactSet had expected Citi to post fourth-quarter earnings of 79 cents per share, on average. Analysts' estimates typically exclude one-time items, such as the $400 million charge Citi plans to record.
In premarket trading, shares of Citigroup Inc. fell 41 cents, or about 1.4 percent, to $29.34, after closing down 8 cents on Tuesday. The stock is up from a 52-week low of $21.40, reached on Oct. 4.
- Vikram Pandit