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Published on January 16, 2008

Citibank's Asian units. including its Thai operation, will not be touched by Citigroup's global job cuts, as they have shown good earnings, Citibank Thailand vice president Tohphan Tuchinda said yesterday.

The Thai branch, with about 2,600 staff, last year turned in its best net profit in several years, he said.

Job cuts have not been officially confirmed by the bank's head office. The CEO of the US parent was due to disclose 2007 results last night.

Citigroup is expected to announce a sizeable dividend cut, a cash infusion of at least US$10 billion (Bt331 billion) and a write-down of as much as $20 billion in mortgage-related investments as part of its fourth-quarter earnings report, people familiar with the plans said.

Citigroup CEO Vikram Pandit is also expected to unveil a cost-cutting plan that will likely include substantial lay-offs. The moves are part of his push to shore up the company's finances, including replenishing its depleted capital.

At a board meeting yesterday, Citigroup directors were poised to sign off on Pandit's recommendation of cutting the bank's quarterly dividend payment, said a person familiar with the matter. The size

of the cut was not clear, but analysts and some investors have been bracing for it to get sliced roughly in half from the current 54 US cents a share. A 50-per-cent reduction would save Citigroup more than US$5 billion (Bt166 billion) per year.

For investors, the dividend cut will be an especially painful sign of how badly Citigroup has stumbled. Citigroup executives had insisted for months that the pay-out was safe despite the widening conclusion by analysts that the bank had little choice but to cut it. A smaller dividend could be a sign Pandit is willing to consider even more radical steps, such as breaking up the company.

Citigroup has lined up several investors to pour funds into the cash-strapped company, say people familiar with the matter.

The Government Invest-ment Corp of Singapore (GIC) would be the largest investor. The US bank is looking for "at least $5 billion [from the GIC], but it's not certain whether the deal will go through, and the amount is not set. It could be more, or it could be less", a person familiar with the situation said.

The other possible investors are the Kuwait Investment Authority and Saudi Prince al-Walid bin Talal, a long-time Citigroup shareholder. At least one US money-management fund also will likely participate in the infusion.

The expected investments, coming on top of Citigroup's sale last November of a $7.5-billion stake to the Abu Dhabi Investment Authority, would make the company by far the largest financial-institution recipient of cash from sovereign-wealth funds.

Highlighting the deep pools of cash available in Middle East and Asian funds, Citigroup in recent days managed quickly to line up fresh financing after the Chinese government balked at a planned $2-billion investment by the China Development Bank.

Deep job cuts would represent the second major cost-cutting push by Citigroup in the past year. People familiar with the situation say more than 20,000 jobs will likely be eliminated, with the resulting expense included in a restructuring charge.

Citigroup's investment bank is expected to be the hardest hit, with roughly 6,500 lay-offs expected, one person said. Last spring, Citigroup said it would cut 17,000 of its staff, representing 5.67 per cent of its global workforce of more than 300,000.

Pandit apparently is hoping his announcements will allow him to move beyond the clean-up phase of his job. Today, he is set to huddle with top managers at Citigroup's sprawling corporate retreat in Armonk, New York, to hash out the company's future strategy. Next month, he plans to embark on a "listening tour" of various Citigroup businesses around the world.

While lay-offs are already underway and expected to intensify this week, Citigroup may not disclose the specific number of jobs it is cutting.

Somruedi Banchongduang

Dow Jones Newswires

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