Is Citigroup Going to Zero?

The Wall Street Journal is reporting that Citigroup is firing 10,000 people this week and has ordered executives to cut compensation costs by 25%. With a global work force of 352,000, 25% would mean another 60,000 jobs. Citi has already eliminated 23,000 jobs in the past 4 quarters.

Citigroup’s stock has been a death spiral for the past year, falling below $10 this week for the first time since the mid 1990s.

Several ETFs have large exposure to Citigroup. The ETF most at risk is the FTSE RAFI Financials Sector Portfolio (PRFF) which had 7.6% of the fund in Citi as of November 13. The fund is a fundamentally weighted portfolio of the largest financial services firms and is rebalanced annually.

Also at risk is the Dow Jones Financial Services Index Fund (IYG) which has a 5.6% concentration in Citi as of November 13. The fund’s index is cap weighted and rebalanced quarterly.

Henry Blodget and Aaron Task of TechTicker are reporting that, in addition to the job losses, cost cutting has gotten to the point where there are no towels in the restrooms at Citi’s headquarters.

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