Recession continues into fourth quarter
to cut interest rates at its meeting tomorrow,” said Marie Diron, senior economic adviser at Ernst & Young. “It has explained before that it thinks such a cut would have no impact on the economy as the transmission mechanism remains impaired.”
As well as announcing its latest interest rate decision, the ECB is also due to unveil its latest quarterly economic projections. They’re not expected to show a recovery in the eurozone economy before the second half of next year at the earliest as many governments continue to enact spending cuts and tax hikes to lower debt.
A separate survey reinforced market expectations that the recession in the eurozone has continued into the fourth quarter. Though the monthly purchasing managers’ index — a broad gauge of business activity — from financial information company Markit was revised up to 46.5 in November from the previous estimate of 45.8, the survey still points to recession — any reading below 50 points to a contraction in activity. taxpayer-funded bailout loans, and became the poster child for banks that had grown too big and disorderly.
After a long stretch of empire-building, it has been shrinking for the past several years, shedding units and trying to find a business model that’s more streamlined and efficient.
While the job cuts are among the first major moves by Corbat, they are in line with Pandit’s blueprint. Citi’s roster of 262,000 employees is down from 276,000 at this time in 2009.
Citi said it expects the cuts to save $900 million next year, and more in the following years. They will be a drag, though, in the short term: Citi said it expects to record pre-tax charges of approximately $1 billion in the fourth quarter.
Citigroup has had a turbulent recent history, after teetering on the brink of collapse during the financial crisis and receiving a $45 billion lifeline from the federal government.
When O’Neill joined the board in 2009, he was intent on reducing costs in the bank’s vast operations. O’Neill has had practice turning around an underperforming bank, having steered Bank of Hawaii to profitability earlier in his career.
His plans, according to several former colleagues, typically involve ruthless cost-cutting, often resulting in bank branches being closed. In its announcement Wednesday, the bank said 84 branches worldwide would be closed.