CNBC's Charlie Gasparino reported Wednesday that, according to internal sources, Citigroup is likely to announce further job cuts of up to 10% of the workforce - some 32,000 staff.
And Bloomberg reports that Citigroup founder Sandy Weill said in an interview that job cuts are unavoidable, and he asserted that it's no good putting 'our head in the ground'. Although dismissing thoughts of a further break-up of the empire he created, Weill did say that the firm's headcount has grown 'dramatically' and acknowledged that 'there's room' to cut heads. He added, 'it's never a pleasant thing, but it's not a pleasant thing to have a company not doing as well (either)'. (The slide in Citi stock this year is estimated to have cost Weill a cool $400m).
In the meantime, Citi's shares closed some 5.3% down in New York Wednesday as shareholders came to terms with the appointment of Vikram Pandit and Sir Win Bischoff as CEO and chairman. The Financial Times quotes Bill Smith, CEO of SAM Advisors, who said that the stock fall was the shareholder verdict on the appointments, which he described as a 'disaster'. Smith said 'they couldn't find a legitimate chairman and CEO. This was plan B'.
Shares in Bank of America and Wachovia also fell Wednesday, as both banks delivered more bad news. Reuters reports that Wachovia boss Ken Thompson revealed that he saw loan loss provisions of around $1bn in the fourth quarter - almost double previous estimates. And Bank of America CEO Ken Lewis said that his firm would have to write-down the value of more debt securities in the fourth quarter than previously thought. The Wall Street Journal reports that Lewis said 'based on conditions today, we expect those write-downs will be larger than have already been reported - although obviously we won't know our final numbers until we close the fourth quarter'. He continued, 'while we do not make a practice of forecasting quarterly earnings, I think you certainly can assume results will again be quite disappointing'. Lewis did say, however, that he expected the bank 'to be profitable in the fourth quarter'.
Finally, Bloomberg quotes Fidelity's stock market guru Anthony Bolton, who has described the fall out from US subprime lending as a 'cancer', the effects of which 'can take some time to work their way through'. Bolton said that 'banks will remain a difficult call for investors next year'.
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