Potential job losses are piling up at Citigroup. After reporting that it suffered a first-quarter net loss of $5.1 billion, the financial group said it would cut 9,000 jobs from its work force.
The net loss was attributed to at least $12 billion in write-downs that the bank took after subprime investments went bad, according to reports.
The poor results include $6 billion in pre-tax write-downs and credit costs on sub-prime related direct exposures. Results also include write-downs of $3.1 billion, after underwriting fees, on funded and unfunded highly leveraged finance commitments, a downward credit value adjustment of $1.5 billion related to exposure to monoline insurers, write-downs of $1.5 billion on auction rate securities inventory, and a $3.1 billion increase in credit costs in global consumer, according to a company statement.
“Our financial results reflect the continuation of the unprecedented market and credit environment and its impact on our historical risk positions. During the first quarter, valuations of our subprime related exposures in fixed income markets and leveraged finance assets have further declined and credit costs in our consumer lending businesses have increased,” according to a statement from Vikram Pandit, Citigroups CEO.
Since the subprime meltdown began last summer, Citigroup has taken more than $30 billion in write-downs related to the asset class. The 9,000 in job cuts is in addition to the 4,200 in eliminations that the company announced in the previous quarter, when it also reported disappointing results.
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