Re­ces­sion con­tin­ues into fourth quar­ter

Zone

Austin American-Statesman - - BUSINESS - B Cit­i­group has been seek­ing a more ef­fi­cient busi­ness model. Ad­di­tional in­for­ma­tion from The New York Times.

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.

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