Citi break-up puts hundreds more bank jobs at risk

Citi, the world's largest bank with some 10,000 staff at its offices at Canary Wharf, is preparing to split into "good" and "bad" banks to isolate toxic and unwanted assets from the healthy parts of the business.

This would shrink the once-mighty banking giant by a third and could also involve the sale of various "non-core" units, leading to yet more job losses.

In November, Citi announced plans to axe 52,000 jobs worldwide on top of 23,000 cuts in 2008. Some 2000 staff in London were in the firing line, but that number looks set to rise. Analysts warn 150,000 jobs could go in London this year as the capital, and particularly the City and Canary Wharf, bear the brunt of the recession.

Barclays is cutting at least 2100 jobs globally across its investment banking and wealth management businesses, with 1300 jobs going at investment arm Barclays Capital, 500 at Barclays Wealth and 370 at Barclays Global Investors. Some 500 job losses are due in the UK.

A report by financial recruitment firm Morgan McKinley today said it is taking out-of-work bankers an average of 11 weeks to find a new job — nearly a month more than a year ago — as banks stop hiring.

Former Citi banker Peter Hahn, now an expert in corporate finance and banking at the Cass Business School in London, said job cuts at Citi and other banks were "an ongoing process".

Citi chief executive Vikram Pandit has been under pressure to raise new capital and streamline the business after the US Government provided $45 billion (£30.6 billion) in emergency cash and a $300 billion guarantee for its most toxic loans.

Citi last night sold a majority stake in wealth management business Smith Barney to Morgan Stanley for $2.7 billion. Details of the next phase of restructuring are due this month.

Last November, Pandit said he wanted to keep the bank together, describing it as "a truly global universal bank". Hints from the US Treasury and Federal Reserve of no further aid appear to have changed his mind. He looks set to place unwanted assets worth $600 billion, a third of the balance sheet, into the bad bank and keep global commercial retail bank separate.