Citi slashes 11,000 jobs thanks to Obama regulations
New regulations are costing jobs around the world.
Citibank is shedding 11,000 jobs as well as scaling back operations in new markets in an effort to save $1 billion through the next year. The move to drive down costs comes as Obama's tax increases couple with the fiscal cliff and European debt crisis to create uncertainty across the industry.
The new CEO of the company, Michael Corbat, 52, took over in October and has set out to reduce operating expenses. In January, his plan will cut 11,000 jobs and reduce some global operations. Many of the streamlined jobs will be in other countries besides the U.S.
The move is expected to save Citi nearly $1 billion in 2013. The announcement has already caused Citi's share price to move upwards by 4 percent.
The anticipated percentage reduction of the workforce is about 4.2 percent.
The reasons for the cut include a number of changes in the fiscal landscape. As President Obama's new tax increases and a variety of fiscal regulations impact the industry, the banking giant must make tough choices to comply while upholding its fiduciary responsibilities.
Also a factor is the fiscal cliff and European debt crisis. Both events could have a major, adverse impact on the banking industry as a whole should either one come to a head.
The bankers themselves are also seeing some cuts. Bonuses for some divisions are being cut by as much as 10 percent, particularly in the securities unit of the company.
New capital rules are to blame, which are compelling banks across the nation to slash both staff and pay to continue generating any profit at all.
Some staff can be replaced with computers and upgraded technology, while others will simply have to work harder to finish their tasks. This is common in any industry where staff is reduced.
The ultimate hope is to protect Citigroups investments around the world, and to allow the company to remain competitive in the global market. Of course, if governments, particularly in the U.S. continue to change the rules of banking, then further changes may have to be made in the years to come.
© 2014 - Distributed by THE NEWS CONSORTIUM
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