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Uncertainty sends Citigroup lower Citigroup plunges on uncertainty
(about 1 hour later)
Shares in Citigroup, one of the biggest banks in the US, fell sharply on Friday amid ongoing uncertainty over the company's future. Shares in Citigroup, one of the biggest banks in the US, fell sharply on Friday amid continued uncertainty about the company's future.
The stock rose in early trade but later declined 13%, in advance of a board meeting later on Friday. The firm's stock rose in early trade but later declined 18% as board members began a meeting.
The Wall Street Journal reported that Citigroup was considering selling parts of the firm. There are also rumours it might merge with another firm.The Wall Street Journal reported that Citigroup was considering selling parts of the firm. There are also rumours it might merge with another firm.
Earlier in the week the firm announced 52,000 job losses worldwide.Earlier in the week the firm announced 52,000 job losses worldwide.
These cuts came on top of previously announced reductions of 23,000 positions.These cuts came on top of previously announced reductions of 23,000 positions.
The total 75,000 job cuts represent a cut of about 20% of its staff, leaving it with 300,000 jobs worldwide "in the near term".The total 75,000 job cuts represent a cut of about 20% of its staff, leaving it with 300,000 jobs worldwide "in the near term".
Bank's future
Chief executive Vikram Pundit told employees on Friday that the firm did not want to change its business model, Reuters reported, citing two employees.
Shares in the firm have fallen sharply since the start of the year and are trading more than 80% down since January.Shares in the firm have fallen sharply since the start of the year and are trading more than 80% down since January.
Saudi Prince Al-Waleed Bin Talal's decision to buy about $350m (£236m) of its shares on Thursday did not calm investors' nerves.Saudi Prince Al-Waleed Bin Talal's decision to buy about $350m (£236m) of its shares on Thursday did not calm investors' nerves.
But the firm insisted on Thursday that it had "very strong capital and liquidity position and a unique global franchise". The firm insisted on Thursday that it had "very strong capital and liquidity position and a unique global franchise".
Investors are worried that future losses could threaten the bank's future. But Mr Pandit has come under increasing pressure from critics who doubt his ability to turn around the company and survive the financial crisis.
'Bloodletting''Bloodletting'
Citigroup has lost more than $20bn in the past year because of the global financial crisis.Citigroup has lost more than $20bn in the past year because of the global financial crisis.
Despite the sweeping job losses, the bank has maintained that its underlying business "remains strong and revenues have been stable".
Other financial services companies will cut jobs in the near future according to Brian Sullivan, chief executive officer of executive search firm CTPartners.
"The bloodletting in the financial-services industry will accelerate in coming months, with job cuts doubling to about 350,000 worldwide by mid-2009," said Mr Sullivan. This figure is equivalent to 20% of the global workforce at financial companies before the credit crisis began, he said.
Meanwhile, Citigroup's chief executive, Vikram Pandit, has come under increasing pressure from critics who doubt his ability to turn around the company and survive the financial crisis.
The bank has reported four straight quarterly losses and some analysts believe the bank will not return to profitability until 2010.The bank has reported four straight quarterly losses and some analysts believe the bank will not return to profitability until 2010.
It is one of nine financial institutions receiving funds from the US government's bail-out programme. Investors are worried that further losses could threaten the bank's future.
"Its fear and panic at this point, " said Gerard Cassidy, a banking analyst at RBC Capital.
Despite the sweeping job losses, the bank has maintained that its underlying business "remains strong and revenues have been stable".
But Jason Goldberg, a Barclays Capital analyst said: "We worry if the lack of investor confidence leads to a lack of customer confidence.
Citigroup is one of nine financial institutions receiving funds from the US government's bail-out programme.