Citigroup will lay off 4,500 employees, reducing its work force by 2% to 262,500.  Presently the bank employees 100,000 fewer people than it did in 2007 before the credit crisis struck.  Hardest hit will be Citi’s back-office and investment banking operations.  Its Wall Street-related business has been hard hit by a slowdown in trading volume - but it would appear that nearly every part of Citi’s sprawling businesses will face cuts. According to an announcement by CEO Vikram Pandit, the law offs would take place in the coming months.  The personnel move will also cost the bank $400 million in Q4 of 2011 - to cover severance and other costs. Latest Big Bank to Announce. Citigroup is the latest big bank to announce extensive layoffs, after the bank used the summer to quietly prune or trim its workforce.  The slowdown in the world economy has slowed in recent months, putting Wall Street firms under intense pressure.  More traditional or commercial banking has also been hit hard by anemic demand for loans, as well as new regulations and consumer outcry against fees on checking accounts, debit cards and credit cards. Pandit made the announcement at the Goldman Sachs financial services conference on Tuesday, framing the layoffs as part of his plan to brace the company for an even more difficult road ahead.

“Financial services faces an extremely challenging operating environment.  These trends will likely significantly affect the competitive landscape in the coming years.”

Pandit Approaches 4th Anniversary. Pandit took over the bank almost four years ago, and throughout that time he's been making steady progress on a plan to transform Citi from a global banking behemoth into a more nimble, corporate lender.  Hundreds of billions in assets have been shed from the balance sheet, while bank risk controls have been strengthened and the $45 billion bailout was repaid. Which is why Mr. Pandit received a retention package worth at least $23 million earlier this year, after taking just $1 in compensation over his first 3 years.  [C-I Note: Of course, Pandit sold his okay advisory business to Citigroup at a handsome premium - getting something like $170mn.  So, it was not simply altruism that made him work for free.] [NYTimes, 12/6/11]