InvestIdeas

19 May 2008 21:26 GMT

Citigroup To Shut 2 UK Personal Loan Operations; May Cut 650 Jobs
LONDON (AP)--Citigroup Inc. (C) will close two of its U.K. personal loan operations and could cut more than 650 jobs, the embattled banking giant said Monday.

Citi UK said that from Wednesday it will also stop offering loans through its Future Mortgages and CitiFinancial arms, which deal mainly in subprime mortgages and unsecured personal loans.

"This business realignment reflects Citi's recently announced global focus of allocating capital to the best opportunities for growth," the company said in a statement.

Citigroup didn't say specifically how many jobs it would cut, but the bank wants to close its office at Doxford, in northeast England, and various CitiFinancial locations throughout the country that it says employ a total of more than 650 people.

The company said the online bank Egg, which it bought from Prudential PLC (PUK) last year, won't be affected.

Citigroup Inc. Chief Executive Vikram Pandit has launched a painful restructuring process in the hope of restoring profitability to the bank, which was badly bruised by the collapse of the U.S. subprime mortgage market.

Earlier this month, Pandit told investors that the bank wants to shed between $400 billion and $500 billion worth of "noncore" assets over the next three years.

Hi guys,

Any of you invested in Citigroup, UBS, Merril Lynch or any of the banking stock?

I was reading "John Neff on Investing" and this fund manager has invested in Citibank at different points (most troubled times) throughout his 30 year career.

Any thoughts or advice?

PS: I'm thinking of investing in the financial sector when blood is in the streets, trying to redeploy some funds from gains taken off the O&G sector.

hi aspelian,

i assume u have followed C's saga since end of last year...you will recall they chopped their dividend for this 1st time in years, lost some usd5bil last qtr primarily bcos of bad assets writeoffs.

they have been reducing workforce in US and all over the world. here in singapore, they started a network center (GNCC) just 3rd Q07 and i've discovered that they had just had a headcount freeze on this outfit. C decided to close 2 UK offices and retrench all of those stafft. in japan, they sold off their building to raise capital. in short, they are doing what needs to be done to repair the damage. this can be seen as good mgt.

C makes about usd5billion/yr of profits from overall worldwide businesses.

the tricky part is in not knowing how much more bad papers they have... we will never know until they decide to declare them. now that the MBS market is stabilized by the Fed's actions. it appears that these assets may not continue to slide further in values. but C can always choose to mark to market as and when they choose to ... so, it's paper losses now. as in all paper losses, if they avert regulatory requirements, they may choose to not declare them until much later... by then, maybe the mark to market values would have increased further.

technically, C looks like it is going to continue to slide. the recent low is ~18... now it is ~21...

it is quite inconceivable to me that C will not exist in the years ahead... but who would have guessed that Bear Sterns would be relegated out of SP500 listing, right? although, C actually cannot be equated with BSC...one is a fullfledged bank, the latter a broking house. even if C's mortgage arm collapses, the bank still has several other Lines of Businesses.

to buy C long term, because she is fundamentally strong in carrying on her businesses, and thus generate revenue and profits, more than enough to eventually pay for the losses, must be the sole consideration.

to buy C for a short term rebound profit, will likely have to wait for a clearer signal to enter.

ps : i bought some C recently and also let it go recently too

what do you think? r u planning on going at it for a short or long term?

I too invested in Citigroup recently and also let go with a small profit. GIC or was it Temasek bought into C at about USD 25 so I believe I would not go wrong if I buys at about USD20. If I am a fool, then Temasek would be a greater fool...

I still hold the view that it is a good buy if it is for the long term because C is a BIG Franchise all over the world, it is a world bank and not just a bank in America. If they wants to sell which I think they just did in Germany, there would be lots of takers. Strip away all their subprime woes, and you see it is a very profitable bank!

Rooster

kennynah wrote:hi aspelian,

i assume u have followed C's saga since end of last year...you will recall they chopped their dividend for this 1st time in years, lost some usd5bil last qtr primarily bcos of bad assets writeoffs.

they have been reducing workforce in US and all over the world. here in singapore, they started a network center (GNCC) just 3rd Q07 and i've discovered that they had just had a headcount freeze on this outfit. C decided to close 2 UK offices and retrench all of those stafft. in japan, they sold off their building to raise capital. in short, they are doing what needs to be done to repair the damage. this can be seen as good mgt.

C makes about usd5billion/yr of profits from overall worldwide businesses.

the tricky part is in not knowing how much more bad papers they have... we will never know until they decide to declare them. now that the MBS market is stabilized by the Fed's actions. it appears that these assets may not continue to slide further in values. but C can always choose to mark to market as and when they choose to ... so, it's paper losses now. as in all paper losses, if they avert regulatory requirements, they may choose to not declare them until much later... by then, maybe the mark to market values would have increased further.

technically, C looks like it is going to continue to slide. the recent low is ~18... now it is ~21...

it is quite inconceivable to me that C will not exist in the years ahead... but who would have guessed that Bear Sterns would be relegated out of SP500 listing, right? although, C actually cannot be equated with BSC...one is a fullfledged bank, the latter a broking house. even if C's mortgage arm collapses, the bank still has several other Lines of Businesses.

to buy C long term, because she is fundamentally strong in carrying on her businesses, and thus generate revenue and profits, more than enough to eventually pay for the losses, must be the sole consideration.

to buy C for a short term rebound profit, will likely have to wait for a clearer signal to enter.

ps : i bought some C recently and also let it go recently too

what do you think? r u planning on going at it for a short or long term?

Hi Kenny,

I am looking to go long term on Citigroup cos in 2-3 years to come, this saga will pass and Citi will emerge from the ashes. +ve thing is that across board quite a number of US and european banks are affected by these sub-prime, so citi is not alone, and i wont be too worried that citi is losing lots of grounds to its competitors. Unlikely Citi will go bust as it has shown SWFs are interested in being angel investors to brand-name banks and GIC already have stake in it. (i am sure they have done their due diligence)

Like what u mentioned on its price trend, i will wait to buy below $20 cos there should be more bloodshed down the road from the consumer banking side when mortgages are not paid and credit card debts mount.

on a side note: Spore being a "well-to-do" country has S$3 BILLION of credit card debts being rolled over each month!! cannot imagine how deeply indebted are the US consumers.

Citigroup Readies More Job Cuts Under Pandit's Plan (Update1)

By Bradley Keoun

June 23 (Bloomberg) -- Citigroup Inc. may begin another round of job reductions as soon as this week as part of a plan to cut its trading and investment-banking workforce by 10 percent, said a person with knowledge of the matter.

The largest U.S. bank is about halfway through the 6,000 job cuts at the division signaled in March, said the person, who declined to be identified because Citigroup hasn't disclosed the plans publicly. Citigroup employs about 300,000 people worldwide and has announced more than 13,000 job reductions this year.

Chief Executive Officer Vikram Pandit is lowering costs and shedding assets after the New York-based company reported two straight quarterly losses totaling $15 billion. The world's largest banks and brokerage firms have slashed more than 80,000 jobs since subprime mortgage defaults infected credit markets and led to almost $400 billion of writedowns and losses.

``I see more downsizing to come,'' said Andy Mantel, managing director of Pacific Sun Investment Management Ltd. in Hong Kong. ``Banks need to take precautionary measures.''

Citigroup, whose shares rose 8 cents in early German trading today to $19.38, has disclosed plans to eliminate more jobs during the past year than any other financial institution, according to data compiled by Bloomberg. UBS AG, Lehman Brothers Holdings Inc. and Merrill Lynch & Co. are among the companies to announce more than 5,000 job reductions.

Second-Quarter Loss

``Citi indicated earlier this year that it would be resizing this business in response to market conditions and as part of our ongoing re-engineering efforts,'' said Dan Noonan, a spokesman for the division, in a prepared statement.

The company probably will report a second-quarter loss of 40 cents a share after $8.7 billion of asset writedowns, UBS analyst Glenn Schorr said in a June 20 note to clients.

Schorr's prediction came after Chief Financial Officer Gary Crittenden forecast ``substantial'' additional writedowns and more losses on consumer loans. Citigroup's $42 billion of credit losses and writedowns since last year account for about 10 percent of the global total, according to Bloomberg data.

Citigroup has lost more than any company in the mortgage market rout and its shares tumbled 63 percent in the past year. Pandit, 51, was promoted in December to replace Charles O. ``Chuck'' Prince, who was ousted two months earlier.

Goldman Jobs

Citigroup said in January it would eliminate about 4,000 jobs in the securities division, and said two months later that the number had increased by about 2,000. Citigroup then said in April it would slash 7,000 jobs outside the investment banking group over the next year, and executives have said further reductions are likely.

The Wall Street Journal reported yesterday that employees may begin receiving termination notices this week.

Goldman Sachs Group Inc., the biggest U.S. securities firm, will get rid of as much as 10 percent of the jobs in its investment banking division in one of the company's largest single rounds of headcount reductions this year, the Financial Times reported today, without citing anyone.

To contact the reporters on this story: Bradley Keoun in New York at [email protected]

Blood is in the street for this counter. Took my first small nibble of Citigroup. Horizon of 3-5 years. May average down if it drops significantly more.

Cheers. (vested)

Wow, didn't notice it'd dropped to sub-18. Good luck!

haemorrhaging.... need a torquing knot fast....else may actually bleed to death....

wah...tonight trying to achieve aug2002 low...

kennynah wrote:haemorrhaging.... need a torquing knot fast....else may actually bleed to death....

wah...tonight trying to achieve aug2002 low...

Tomorrow papers... Temasek and GIC to the rescue...