Citi Layoffs - Incoming Junior Bankers Not Safe

Ouch. Right during analyst bonuses/reviews/2nd year sendoffs.

"Entire trading desks in New York are expected to be eliminated"...yikes

Yeah that's rough. I wonder how they'll handle bonuses for layoffs - say "Here's your bonus, goodbye?" They couldn't screw them out of bonuses, could they...?

Can someone post the text of the article for those of us without an online sub?

They can screw anyone they want to, especially poor analysts who have worked their asses off

Citi to Slash Investment Banking Jobs World-Wide
By DAVID ENRICH and DENNIS K. BERMAN
June 23, 2008

Citigroup Inc., in the latest sign of bloodletting on Wall Street, is set this week to embark on an aggressive round of layoffs within its investment-banking division, people familiar with the matter said.

The New York bank, which has suffered $15 billion in losses over the past two quarters and is likely to rack up billions of dollars in additional write-downs in the second quarter, this week will dismiss thousands of investment-banking employees world-wide as part of a plan to cut the roughly 65,000-employee group by 10%, the people said. Pink slips are likely to be handed out Monday.

"Citi indicated earlier this year that it would be resizing this business in response to market conditions and as part of our ongoing re-engineering efforts," spokesman Dan Noonan said, without confirming specifics.

Across Wall Street, investment banks are adjusting to meager times as they deal with drop-offs in everything from mergers to initial public offerings.

Citigroup, which has more than 350,000 employees around the world, had fired at least 9,000 workers as of March 31. Still, the coming cuts are unusual in their scope and severity. Mergers-and-acquisitions bankers are expected to see especially sharp cuts, in part because their ranks were not trimmed as much as other units earlier this year. But no major department is likely to be spared, aside from some businesses in emerging markets and Citigroup's lucrative transactions-services arm.

Entire trading desks in New York and other cities are expected to be eliminated. And unlike Citigroup's other recent reductions, this round will feature layoffs of dozens of senior managing directors, the people said.

The cuts are the first big move by John Havens, who took the helm of Citigroup's institutional-clients group, which includes the investment bank, in late March. Mr. Havens, a longtime lieutenant of Citigroup Chief Executive Vikram Pandit, has concluded that some of the investment bank's businesses have been rendered obsolete by the credit crunch, while he sees others as operating inefficiently and generating inadequate returns. Mr. Pandit's goal is to reduce the firm's annual expenses by $15 billion.

Jesus...right before bonus season...

Yes, I usually do. Unfortunately, you're not going to like it.

This reduction in force has been a long time in coming. Prior RIFs were scaled back first because Vikram wanted to put his stamp on things, then because Havens had to do the same. What I understand is that this turn was originally directed towards moderately senior bankers, but has been expanded to try to get most of the pain behind everybody before paralysis sets in.

Want the real bad news from (most) of your perspectives? Citi is going to be pulling offers on incoming junior bankers shortly. You heard it here first.

So which bank hasn't had any layoffs these past 2 years yet?

I'm fairly certain there is no bank that has not laid off

Smells fishy that they put out the news right before the week of bonus. Maybe that's their way of keeping people happy while giving them smaller bonuses (Hey! atleast you still have a job)

Will banks even recruit in spring 2009? Everything seems to be getting worse and worse.

Lazard, Greenhill, Evercore and Macquarie...anyone know of these guys laid people off yet?

Actually, if you think about it, this isn't anything new, really. Back when Pandit took over he announced that they'd be laying off 10-15 percent. They laid off about 5 percent of the IB a few months ago, and here is the remaining 10 percent. The question now is, is this it for Citi or is there more to come?

BTW, this is a horrible way to manage a business, having staggered layoffs. If management has any sense at all they will send out an email saying, "OK, we've made all the cuts we will be making and you can relax now". But Citi and all the banks are in such crappy condition that I doubt they can make this guarantee to their employees...

I understand your perspective, and this may make sense in a theoretical way, but imagine for a moment how hard that would be to implement in practice. I say this with some (unfortunate) experience, since I'm part of the decision-making process.

The only way to really do it is to make the most aggressive cuts you could possibly imagine. Ask yourself what I have to: do I really want to take out everyone I might have to to make the "we're done" statement a reality? I can envision a situation where every firm on the Street might have to take out over half our remaining headcount before this is all over. Are you prepared to do that now?

What if you're wrong? How much business and revenue (and to some extent, market share) are you willing to concede to do it? Remember, these are also your friends, your colleagues, your proteges we're talking about taking out back, lining up against a wall and shooting. Is this a step you're really prepared to take?

I agonized over every banker we decided to lay off. I looked for every excuse to try to save one more job. There were obvious calls, but no easy decisions. You should hope that when your firm cuts, your executive leadership thinks the same way.

Genghis can you provide any more info regarding the incoming analyst layoffs? Maybe over PM if necessary? I am heading to Citi and am actually moving soon to nyc, so i'm obviously very worried after reading this news

Wait a week. I'm not positive on timing, but Citi's decisions were made over the last two weeks at all levels, and I would think communication of those decisions should be done by the end of this week. They know that incoming people are in the process of finding apartments etc. and I'd be surprised if they don't move reasonably quickly.

It's a brutal time. All I can say is don't close any doors. A lot of people will say that it doesn't matter if you get laid off, over the matter of a career it won't matter, blah blah- I won't bullshit you, getting laid off drastically alters your plan (at least a few years) but that's the way it is. Very few people actually end up with the optimal career path that they envision.

Hmm..according to dealbook, the new layoffs will only be 2,000 employees, bringing the TOTAL layoffs (previous and forthcoming) in the investment bank to 10 percent - not 10 percent additional. If that is the case, this would actually be good news...but it seems there are conflicting reports...

http://dealbook.blogs.nytimes.com/2008/06/22/citis-investment-bank-brace...

Appreciate the added input Genghis. One thing I was wondering, is HR alerted to these types of cuts beforehand? The fact that they have been emailing out to the incoming analysts quite a bit recently would add to the sting of a layoff.

Genghis,

Do you know of any other firms that have already made plans to rescind 1st year offers?

Additonally, who makes these decisions? The global head of the group? How do you determine who to lay off?

I am starting in a few weeks and I am the only analyst joining a MM PE firm. How bad is the situation for PE firms? Do you think they'll be cutting their (admittedly small) workforces?

We've been doing deals, but not nearly as many as last year or the year before. There's portfolio company work, but even that's not much to occupy everyone.

If PE lays people off, I am guessing they'll more likely be at the senior level? Analyst/associate salaries are a rounding error for the firms. I am guessing Blackstone, KKR, Carlyle will go first with layoffs and pulling offers from hired pre-MBA bankers/consultants...

My condolences to anyone affected by these layoffs. Everyone's going to tell you that it's not the end of the world and that you'll spring back, which is true. But **** like this is real tough and can really screw up social lives and emotional well-being.

You do realize that everyone besides analysts gets paid in January and early February, right?

A VP in my former group got let go the day before bonus payouts, and got half of his expected.

not that i have heard. i think word o nthe street is actually macquarie was still actively hiring junior bankers and evercore was looking to add a few senior partners hopefully on the cheap

I am starting at Citi in less than a week as an incoming analyst. Can someone comment on the status of group placement? Should I avoid certain groups? I never expected my first job to be like this....

great photo

Eh...yes..I'm aware...my point is that this is going to be a loaded week for people, particularly analysts...

Reviews..send off parties...bonus seasons...watching your colleagues ushered off...

Just a complete a sh!tshwo

And it doesn't stop.

http://dealbook.blogs.nytimes.com/2008/06/23/goldman-said-to-prepare-sco...

This shit's a fucking circus.

Not good news at all. How is this affecting Asia? As far as I know, Asia hasn't seen any layoffs.

according to this article, only half of the 6,500 have been laid off so far.

http://www.cnbc.com/id/25329092

I'm curious about this too. HR was in email contact last week and I spoke to someone in HR today (about an unrelated issue) who was as cheery as usual.

Same here - just got an email this morning reminding me of my start date for training

That's their job.

(as mentioned in this article - http://news.efinancialcareers.co.uk/newsandviews_item/newsItemId-14128)

that incoming analysts/associates are okay for the time being (hence the reassuring emails from HR trying to calm already frayed nerves). it looks like the true "middle-men" (i.e. - VPs, senior associates) are taking the brunt of the punishment this time around.

this is what happens when, like Citi, you have a failed business model

Heard that Citi pulled offers on 40% of the incoming analyst class. Is this true??? This sounds crazy.

Citi was going to pull incoming analyst offers, but I did not know it was close to 40%...wow..

Can we stop with the bullshit rumors? Ragnarok that means you. Devils Advocate - you believe everything you see on an online forum?

Unless you're like Ghengis and have some amount of real information, cut the bullshit.

Apologies for the repeated question, but any word on junior bankers being cut from the boutiques(PW/GHL/EVR//LAZ?

where on earth did the number 40% come from? agree with nystateofmind

One thing I don't get is why Citi would even take in a new class of analysts, when they're dumping current employees from the same division.

Plus, I don't think the laying off of employees is over, back in the 70s when the economy was slowing down and Wall Street was getting hammered the banks dumped 15% of their employees in one year, and then 12% the following year.

Anyone see this on dealbreaker: This MIT grad represents how shitty the job market is now

http://dealbreaker.com/2008/06/unemployed_banker_wears_mit_gr.php

I've also never understood this. As someone who will be going through FT recruiting this year, I am almost convinced that most banks will not be hiring.

Yup. Everything I hear.

Please...I'm taking everything with a grain of salt. Calm down.

I agree with nystate that you should not let the anxiety paralyze you into panicking at every new rumor.

My information comes from a number of long-time friends, including a couple at the group head level who were complaining about the depth of the reductions their groups were taking.

I don't think it will be the norm, but that percentage is not out of the question for some groups. One friend pointed to the direct placement issue as driving the need for the offer revocations. In other years, the question might have been deferred until group placements were final.

Whatever the case may be, I'd point out that Citi's cuts will not likely be as traumatic as JPM's a few weeks back. Several groups I knew well were effectively gutted in order to rationalize the headcount and accomodate a large influx of Bear people.

While this is normally the case, I believe it is an inaccurate view of what is happening this time around. Whether it is JPM, MS, Citi or a number of boutiques we've seen enact layoffs, the pain has disproportionately fallen upon the associates and analysts versus any time I have ever seen previously in my career.

Based on prior experience, I would have expected more MD/ED/D/SVP level cuts than I have seen, and far fewer associates and analysts. We'll see if that lasts.

No incoming class, but this swing of the axe has certainly taken a fair share of analyst and associate heads. I work with a few former Citi guys and about I'd say about 25% of their peers are gone.

Can you expand on this? Not sure I understand.

Yep, there were some major cuts at JPM a couple weeks ago that seemed to fly under the radar a bit. A few good friends were axed essentially out of nowhere.