Bank Citigroup axes 52,000 jobs
The cuts – along with previously announced job losses of about 22,000 – will leave it with 300,000 employees worldwide. The group, which has offices in Edinburgh, said the losses would fall "particularly heavily" in London and New York. It is the most severe jobs cut by a bank since the collapse of Lehman Brothers in September and comes days after Royal Bank of Scotland said it was cutting 3,000 staff across the world.
Analysts said further job cuts were "inevitable", and that the UK, and Scotland in particular, were vulnerable because of their heavy reliance on the financial services industry.
Citigroup's cull follows announcements at the weekend by JP Morgan, which is to axe 3,000 posts, and Morgan Stanley, which said 10 per cent of its investment banking jobs would go.
Away from the financial services sector, Avis, the car rental firm, said yesterday it planned to jettison 5 per cent of its workforce – or 315 jobs.
Over the past year, Citigroup has lost $20 billion (13 billion) and it is now being forced to reduce costs by 20 per cent, selling off "risky" assets and shedding thousands of staff.
About half of the latest job cuts are understood to be accounted for already, with the sale of the group's German retail banking business and an Indian outsourcing arm. The remaining 26,000 jobs are to go by the first half of next year.
Citigroup has some 12,000 employees in the UK, most of them in London, where it has offices in Canary Wharf, and Derby, where its online bank, Egg, is based. It also has staff in Scotland, and employs around 300 people in Edinburgh.
It told its workers of the looming reductions yesterday.
Win Bischoff, the company's chairman, speaking at a business forum in Dubai, said it would be irresponsible for Citigroup and other companies not to look at staffing in the event of a prolonged economic downturn.
"What all of us have done – and perhaps injudiciously – we've added a lot of people over … this very benign period," he said. "If there is a reversion to the mean… those job losses will obviously fall particularly heavily on the financial sector. Certainly they will fall particularly heavily on London and New York."
Mr Bischoff did not rule out the possibility that Citigroup's leaders would emulate those at Goldman Sachs by refusing bonuses – a move that would effectively amount to a substantial pay cut for its executives. "Watch this space," he said.
The latest swingeing job cuts follow a meeting of the G20 group of countries in the United States over the weekend. And they deal a blow to Prime Minister Gordon Brown's attempts to absorb the worst impacts of the financial crisis by seeking consensus from governments around the world.
Analysts said it would take more than one meeting to turn the tide for a global economy undergoing its worst upheaval in decades. Shinichi Ichikawa, an analyst at Credit Suisse, said: "To put it harshly, there is little point in trying to figure out ways to prevent a disease once a patient is sick.
"The just-concluded summit came up with no specific prescription to alleviate the effects of the most serious international financial crisis."
Asked about the Citigroup job losses, Mr Brown's spokesman said: "Obviously, we are concerned. Any job losses are a matter for regret.
"The government stands ready to provide whatever support it can to help people find new jobs."
But ministers face a huge task, with unemployment now predicted to rise to 2.9 million by 2010.
The gloomy forecast was given by the CBI yesterday and is in line with predictions made last week by the British Chambers of Commerce. It means one in ten jobs in the UK could go.
Jonathan Davis, a chartered financial planner with Armstrong Davis, warned that the recession would have grave consequences for Edinburgh.
"It will be just as affected as the City of London," he said. "Edinburgh has both HBOS and RBS, which are in severe difficulty, so it will be more adversely affected than many other centres."
He added that further job losses were "inevitable" after the biggest financial collapse for nearly a century.
Stewart Falconer, group leader of economics and financial services studies at Napier University in Edinburgh, said: "We are going to see more and more of that in the coming months. We are clearly in a downturn in the business cycle. It is difficult to say whether, if jobs are lost, they will ever come back."
Bank shares plunge as recession fears are stoked
HBOS was the biggest banking casualty of a shares rout yesterday as the stock market reeled from fresh job cuts and reports the recession will be far worse than first predicted.
Shares in the Edinburgh-based bank sank 16 per cent to 74p, leading a raft of fallers across London's leading stock exchange.
All banks are thought to have been hit by fears that the recession will be deeper and more prolonged than initially thought.
At the weekend Jim Spowart announced he had ditched his attempt to broker a better deal for HBOS. The founder of Intelligent Finance blamed UK government ministers and a series of leaks for ending his campaign. He also said he was told not to speak to opposition politicians.
And yesterday, Gordon Brown, the Prime Minister, was accused of "putting ego before jobs" by continuing to back the Lloyds deal. He was questioned by Angus Robertson, the SNP MP, during a fiery session in the House of Commons.
The Nationalists' leader at Westminster asked him: "We're in a situation where literally tens of thousands of people in the financial sector around the UK are fearing for their jobs, not least in HBOS. Is the Prime Minister confident that mistakes in regulation are now not being repeated with the abandonment of competition rules?"
But Mr Brown went on the counter-attack launching a blistering offensive against the idea that HBOS could remain independent.
The Prime Minister said the bank would have collapsed if ministers had not relaxed competition rules to allow a takeover by Lloyds TSB.
And he accused the SNP of "peddling the myth" around Scotland that it was viable in its current form.
He said it was "complete nonsense" to claim it was a healthy institution prior to the proposed merger when, in fact, it lost a great deal of money because of its "bad business model".
Afterwards, Mr Robertson accused Labour of "bizarre" behaviour and said: "I think many people in the financial sector who are worried about their jobs will find it extremely distasteful and unsettling that the Prime Minister should choose to run down financial institutions and banks which clearly do have a viable future.
"I find it completely inexplicable that the Prime Minister is doing literally everything in his power to reduce the options for HBOS and their staff."
Yesterday, The Scotsman revealed that the fight for an independent HBOS was "gaining pace" regardless.
Sir Peter Burt – the bank's former deputy chairman who is hoping to rescue the bank with Sir George Mathewson, formerly of RBS – said the battle to stop the proposed takeover by Lloyds was gaining widespread support among shareholders.
Elsewhere on the FTSE 100 yesterday, Lloyds TSB shed 17p to 149p and Royal Bank of Scotland eased 6.3p to 44.7p.
This leaves taxpayers nursing around 8billion in paper losses as the trio are offering new shares under the Government's 37billion recapitalisation plans, with the Treasury set to buy any not taken up by investors.
Barclays, which is battling to convince shareholders of its plans to secure additional capital from Middle Eastern investors, was down 5p at 154.1p, or 3 per cent.
It came after the CBI group of employers warned that the recession would be "deeper and longer" than previously thought.
The business organisation predicted the recession will run for almost all of 2009, with growth hit by the dramatic falls in confidence and business activity in the wake of the recent financial turmoil.
RBS gives up airport car park spaces in company-wide bid to put brake on costs
ROYAL Bank of Scotland has axed its employee car-parking spaces at Edinburgh Airport as part of a cost-cutting clampdown throughout the group.
The firm has "requested" to have its 42 designated "fast track" spaces in the priority short-stay car park removed.
The news comes shortly after new chief executive Stephen Hester revealed he was to get rid of the 17 million Falcon 900EX private jet that flew his predecessor, Sir Fred Goodwin, around the world.
The jet, which was leased from RBS subsidiary Lombard, has been handed back to the leasing firm, which is to continue to rent it out to third parties until a buyer is found. Although it is understood that RBS is likely to have received a discount for the long-term rental of the car parking spaces, ordinary airport users would be charged 32.40 a day – or 11,826 a year – for each space in the same car park, which is otherwise designated for pick-ups and drop-offs. The spaces, which are in a prime location by the car park's entrance and are the nearest spaces to the airport terminal, were intended for RBS employees to minimise the time spent at the airport before and after business flights.
A spokeswoman for BAA Scotland said: "The spaces have been removed at RBS's request."
A spokeswoman for RBS said the cuts had been part of a review of the bank's commercial agreement with the airport.
She said: "We are always looking at the most cost-effective way of doing business and the change of policy on car parking at Edinburgh airport was taken a couple of months ago as part of a review of our travel arrangements."
RBS last week announced 3,000 redundancies worldwide, equivalent to 15 per cent of its global banking and markets workforce.
While these cuts are not expected to affect staff in Scotland, insiders said there could be another wave of redundancies in the months ahead if the downturn deepened.
Taxpayers 'facing 1,500 bill to pay Brown bombshell'
TAXPAYERS face an average bill of 1,500 to pay for Gordon Brown's "borrowing bombshell", Conservative leader David Cameron claimed yesterday.
He called on the Prime Minister to "be straight with the British people" and admit that his plans to increase government debt to fund a "Christmas tax giveaway" would lead to higher tax demands after the next General Election.
Mr Cameron said: "Isn't it the case that Labour's borrowing bombshell will soon become a tax bombshell? Everyone knows the Prime Minister is planning a Christmas tax giveaway. But tax cuts should be for life – not just for Christmas."
Mr Brown hit back strongly as he updated the Commons on the outcome of his weekend attendance at the Washington summit of the G20 major economies and developing nations.
The Prime Minister ridiculed Mr Cameron's Tories for being the only opponents of plans for governments throughout the world to offer tax cuts and invest more in infrastructure projects to kick-start their struggling economies.
Mr Brown yesterday continued to hint that tax cuts were on the agenda when Alistair Darling, the Chancellor, presents his Pre-Budget Report next Monday. Mr Brown said it was important for help to be given to families "now" as he vowed to "take people fairly through this downturn".
Emphasising the benefit of countries taking concerted action to cut taxes, Mr Brown said: "The downturn can be shorter and less deep if Britain takes action and if that action is matched elsewhere."
World leaders agreed at the summit to back greater transparency of "toxic" bank debts, avoid "protectionist" measures that would block foreign imports over the next year and endorsed efforts to recapitalise banks by using public money to purchase shares in struggling institutions. More money was likely to be found to bolster the reserves of the International Monetary Fund to allow it to help small nations that fell into financial trouble.
Mr Brown said: "The emerging consensus across the world ... for governments of left and right, and political parties, with only a few exceptions, is that we should take rapid, co-ordinated and concerted action through the use of budgetary measures."
Mr Cameron asked why only 21 words of the 3,500 in the Washington communique referred to the "fiscal stimulus" – the use of tax cuts and higher spending to kick-start economies.
The Chancellor is reportedly considering a spending and tax cuts package of up to 30 billion, targeted at people on lower and middle incomes, with extra money for housing, transport and hospitals. Mr Cameron said it would cost each taxpayer 1,500 to repay.
He accused Mr Brown of failing to heed IMF warnings about the state of Britain's economy, and said that the Prime Minister's repeated claim that the recession had been imported from America was "starting to sound ridiculous". Mr Cameron said: "If Britain is so well prepared, can you explain why the IMF believes the British economy will shrink faster next year than any major economy in the world?"