Citigroup Cuts 9,000 Jobs After $5bn Loss

City bankers are braced for further job losses after America's largest bank, Citigroup, announced a dramatic $5.1bn (£2.55bn) first quarter loss and plans to slash 9,000 posts — including about 20% of its workforce in London.

Citigroup, which employs more than 11,000 people in London's Canary Wharf, was forced to write down more than $12bn over the first three months of the year. Its problems are down to losses in America's sub-prime mortgage crisis, related problems in the global credit market, and the incurring of more than $3bn worth of bad debts due to late car loan and credit card payments.

Since the sub-prime mortgage crisis erupted, Citigroup, which employs 369,000 across the globe, has announced 13,200 job losses and replaced chief executive Chuck Prince with former Morgan Stanley banker Vikram Pandit. The write downs the company has made on sub-prime assets and the losses it has accumulated in the credit market total almost $40bn.

The bank has sliced its dividend payout to shareholders almost in half as a result of the bad bets made on the world's markets. It has also been forced to call on the investment funds of cash-rich countries such as Singapore and Abu Dhabi to help bail it out. The company has refused to rule out further fund raising exercises to bolster its balance sheet.

Of the 9,000 job losses, about 2,400 are reported to be going in London. Citigroup's job losses in London come on top of recent moves by Merrill Lynch to axe one in 10 of its global workforce and plans by UBS to reduce staff numbers in London. The acquisition of Bear Stearns by rival JP Morgan, meanwhile, is also expected to lead to job losses in the square mile.

Citigroup chief financial officer Gary Crittenden admitted: "This is a difficult business environment... there are no easy solutions here, no silver bullets."

In fact, even more jobs losses could be coming at Citigroup. Pandit said today: "We're very, very focused on efficiency." Many on Wall Street took that to mean that cost cutting is the group's focus over the next few months so more bankers may soon be shown the door.

Citigroup's dramatic first quarter loss comes after the bank suffered a near $10bn loss in the final three months of 2007 after it slashed $18.1bn from the value of its assets because of the sub-prime mortgage crisis and credit crunch.

The fact that its first quarter plunge into the red was not as dreadful as some on Wall Street had feared helped Citigroup shares gain some ground, but the stock is down almost 20% since the start of the year.

"We're not happy with our financial results this quarter," admitted Pandit, "although they're not completely unexpected, given the assets we hold."

Credit ratings agencies reckon Citigroup still has plenty of so-called 'toxic' assets on its balance sheet which may lead to further asset write downs. As a result, one of the major credit rating agencies, Fitch, has downgraded Citigroup's credit rating

The bulk of the first quarter write downs were in Citigroup's investment banking arm which dropped into a first quarter loss of nearly $5.7bn. The bank's consumer business saw profits drop almost a quarter to $1.43bn