Arctic blast from Citigroup
A chill wind is coming from the direction of Citigroup. The US bank is said to have both imposed a hiring freeze and to be gearing up for job cuts.
Financial News reported last week that Citi had put a halt on hiring for the next 18 months while it 'reviews its structure'. And the Financial Times reported at the weekend that Citigroup is planning to make 15,000 job cuts globally.
The axe is likely to fall most heavily in Citigroup's retail banking and credit card operations rather than in its relatively profitable investment bank. However, The New York Times reports that cuts are most likely to come in high-cost investment banking centres such as London, New York and Hong Kong. Citi's US investment bankers may prove particularly dispensable - revenues from the bank's US corporate and investment bank rose only 3% in 2006, while costs soared 29% during the same period.
Citi may not be the only one calling a halt to hiring. Recruiters in London tell us UBS has also imposed a freeze and that ABN AMRO, currently engaged in merger discussions with Barclays, is likely to follow suit.
Andrew Chancellor, head of the financial services division at recruitment firm Robert Walters, says hiring freezes at this time of year are nothing to worry about: "Banks often do it so that they can re-evaluate where they are. This time last year a couple of them had a month off hiring, just so they could get themselves together a bit."
Optimism aside, Citigroup's alleged 18 months off looks more like a hiring sabbatical than a short break of the kind Chancellor suggests. The move may well indicate that Robert Druskin, the bank's new chief operating officer, is planning a more significant structural overhaul than anticipated.