Citigroup is back in the news, and again for all the wrong reasons.
The firm's share price is upsetting stock holders (it is down 49% in the last 2 months), the constant job cuts are affecting morale and speculation mounted last week that Chairman Sir Win Bischoff was likely to be the subject of a boardroom coup (something later denied by Citi). Investors are also becoming frustrated with CEO Vikram Pandit, although he has been in his job for less than a year. Pandit, some say, is a great intellect, but not a strong leader - and he is too slow to act. In these challenging times, many feel, you need stakeholders to rally around a leader. And Pandit, now under intense pressure, is possibly not that man.
The general body of staff is already reeling from the 23,000 job cuts officially announced this year, and rumours are spreading that Pandit, keen to get staff costs down by 25%, is looking to chop another 17,000 positions in the coming months. These cuts are said likely to come through lay-offs, the sale of business units and natural wastage.
The immediate future for the company does not look good. Oppenheimer analyst Meredith Whitney has said that it might be a couple of years before the firm makes any money, and others feel that, as the economic downturn begins to bite, Citi will have no choice but to go back cap in hand to the US Treasury for more bail-out funds.
In the meantime, the jury remains out on Pandit, his management team and the board.
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