Citigroup is the third largest U.S. bank. It plans to lay off 4,500 people. Its CEO said this:
“Financial services faces an extremely challenging operating environment with an unprecedented combination of market uncertainty, sustained economic weakness in the developed economies and the most substantial regulatory changes we have seen in our lifetimes,” said Pandit, 54. “These trends will likely significantly affect the competitive landscape in the coming years.”
Pandit is cutting staff as the European sovereign-debt crisis persists and banks prepare for regulations on minimum capital levels to take effect, threatening revenue from trading and investment banking. Citigroup said in September it would limit hiring to “critical” jobs to control costs.
Citigroup is not alone. Worldwide, financial firms cut 200,000 people worldwide. They cut 598,000 in 2010, and 174,000 in 2009. Nothing is getting better.
The future is not with developed countries, he says.
“Developed economies are undergoing a long period of deleveraging of consumer, financial, corporate and government balance sheets, which will drive slow growth for years,” Pandit said at the conference sponsored by Goldman Sachs Group Inc. “By contrast, emerging-markets growth is expected to continue, fueled by population growth, the rise of a powerful consumer base in the middle class and a growing share of world trade.”
This indicates that things will be increasingly tough on Americans. The main economic growth is nit going to be here.
When America’s third largest bank has to lay off 4,500 people, this sends a message: the U.S. economy is heading into the tank.
Meanwhile, the #2 bank, Bank of America remains is deep trouble. Its shares are under $7.
This points to a crisis brewing in the banking industry. These huge banks are like weather vanes. When the #2 and #3 banks are in trouble, the rest of the economy is not in good shape.
There are discussions about the USA being able to boom, despite a recession in Europe and the popping of China’s real estate bubble. But this talk is being challenged by trouble in two of America’s four largest banks.