Citigroup to cut 20000 jobs and slash dividend : WSJ

Citigroup plans to eliminate more than 20,000 jobs, slash its quarterly dividend and collect at least $10 billion in cash from outside investors to shore up capital eroded by subprime losses, the Wall Street Journal reported, citing unidentified people familiar with the matter. About 6,500 of the more than 20,000 job cuts will be in the investment bank, the Journal said.

If the firm cuts more than 20,000 jobs, it would be the largest program of cuts announced by a bank or brokerage since a surge in subprime mortgage defaults led financial institutions to write down about $100 billion from the value of securities backed by home loans. Financial institutions eliminated more than 153,000 jobs last year, with about 86,000 related to the mortgage business, according to data compiled by Challenger Gray. That was more than triple the 50,300 jobs eliminated by the industry in 2006, the firm said.

Citigroup's most recent quarterly dividend was 54 cents a share and the payout hasn't been cut or suspended since the firm was created in the 1998 merger of Travelers Group Inc. and Citicorp. The bank's $2.16 annual dividend is equal to 7.4% of its stock price, more than twice the 3.6% yield of the average financial stock in the Standard & Poor's 500 Index. A cut in the dividend would reverse a Nov. 4 statement by Citigroup that it had "no plans to reduce its current dividend level." Charles O. Prince stepped down as CEO after the bank warned of bigger-than-expected writedowns on subprime mortgages and related securities.

- They were saying they were going to cut 15,000 jobs earlier and then the figure was 17,000. And now they are saying over 20,000. That's a lot of people.

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