Counterparties: A series of unfortunate repositioning actions

By Ben Walsh
December 5, 2012

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Citigroup will fire 11,000 employees as part of a “series of repositioning actions”. The full press release is a meticulously assembled monument to business-speak. If only its first paragraph, appropriately skewered by Derek Thompson, could be laughed off as parody instead of pink slips for 4% of the company’s workers:

Citigroup today announced a series of repositioning actions that will further reduce expenses and improve efficiency across the company while maintaining Citi’s unique capabilities to serve clients, especially in the emerging markets. These actions will result in increased business efficiency, streamlined operations and an optimized consumer footprint across geographies.

Just five days ago, newly installed CEO Michael Corbat was faced with headlines which questioned whether Citi “had a formal cost-cutting plan”. Consider the answer an emphatic yes. The layoffs will save the company more than a billion dollars a year, about two percent of its operating costs. The cuts dwarf Citi’s previously announced plans to eliminate 300 sales-and-trading jobs, or its competitors’ much smaller reductions.

The NYT’s Jessica Silver-Greenberg writes that 80% of the layoffs will be in consumer banking and back-office roles. Bloomberg’s Christine Harper and Yalman Onaran report that Citi’s global footprint is shrinking: the bank plans to “sell or significantly scale back consumer operations in Pakistan, Paraguay, Romania, Turkey and Uruguay. It will also cut branches in Brazil, Hong Kong, Hungary and Korea, as well as the US”.

Analysts reacted with a largely blasĂ© tone, saying the cuts were consistent with what they had projected and didn’t significantly alter their views. But the market was much more impressed: Citi’s stock closed the day up 6.4%. — Ben Walsh

On to today’s links:

Taxmageddon
The Geithner-McConnell plan to reform the debt ceiling – Treasury Department

Tech
Instagram and Twitter continue to not get along – Verge

Austerity Bites
Debt-crippled Greek hospitals can’t afford enough gloves, gowns, or disinfectants – Reuters

Self-Inflicted Problems
Reminder: America has an intrastructure investment crisis – Derek Thompson

Reversals
US banks have had a pretty good thirteen quarters – FDIC
US Bancorp is worried it will have to buyback more bad mortgages from Freedie Mac – Housingwire

Alpha
John Paulson: the EU is “structurally flawed”, but not enough for my short-EU trades to make money – Bloomberg

Sad Declines
The history of AOL as told through New York Times crossword clues – Quartz

Epistles
“Merry Christmas, one and all, and death to Mussolini.” – Atlantic

Terrifying
Alan Simpson demands America’s youth solve the national debt, attempts Gangnam Style – The Can Kicks Back

Politicking
Maxine Waters will replace Barney Frank?! – WSJ

Says Science
Apes have mid-life crises too – Vox EU

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