Roughly 10% of the troubled bank’s workforce is expected to be layed-off, although analysts say this will not be enough to save the bank, reports The Times.
Citigroup’s new CEO, Vikram Pandit, may also come to conclude that the bank needs to sell off certain non-essential parts of its business.
Meredith Whitney, an analyst at CIBC World Markets, tells the paper that Citigroup would have to sell Smith Barney for approximately $25 billion in order to correct its funding problems.
“In these markets banks can only sell their best assets. The sale of non-core ones would not be material enough. To really reduce their leveraging, Citigroup have to sell a chunk of their mortgage or card portfolio, but there is no market for those assets. The only asset they could sell of any size is Smith Barney,” says Whitney.
JPMorgan Chase has shown interest in Smith Barney in the past and Whitney believes Credit Suisse may also be interested.
Analysts predict that Citigroup will announce writedowns of $18.7 billion for the fourth quarter of the year and cut its shareholder dividend by around 40%.