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After layoffs, Citi cuts down staff's severance package

Source: PTI
December 02, 2008 16:58 IST
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Citigroup, which is axing over 75,000 jobs this year to help cut costs and fight financial crisis, is now slashing the severance package, that too for staff having put 10 or more years with the bank.

Besides, the Vikram Pandit-led bank has hinted at further job cuts in the coming days, after already having cut down or announced plans to bring down its workforce to below 3,00,000 employees from more than 3,75,000 at the end of 2007.

In an internal mail to all its employees in the US, Citi's human resources head Paul McKinnon said on Monday that it would eliminate some 'supplemental severance payment' for the employees with 10 or more years of service, with effect from January 15, 2009.

". . .we have continued to review our policies and practices to ensure that they support our overall business objectives and remain competitive with industry standards.

As a result, a decision has been made to amend the Citigroup Separation Pay Plan for US employees," the mail said.

Earlier last month, Citigroup's CEO has said that the bank would bring down its headcount to below 3,00,000-- a plan that entails more than 52,000 job cuts in the current quarter alone.

Prior to this announcement, Citi had already cut close to 25,000 jobs since the beginning of this year. Citi's headcount stood at 3,52,000 at the end of September quarter.

A few days after the massive layoff announcement, the US government came in to support crisis-ridden Citigroup with a rescue package that entails an overall capital infusion of about $40 billion, alongside a guarantee for troubled assets worth $306 billion with the bank.

The rescue package has stripped down bank's dividend as well as executive compensation payments.

Citi's HR chief said further in his memo that 'the SPP will be amended to eliminate the supplemental severance payment that provides additional weeks of base pay to employees who had 10 or more years of service.'

However, the basic severance benefit for the eligible employees remains unchanged, under which payment is made for two weeks of base pay for each full 12 months of service, with a maximum limit of 52 weeks of base pay.

The bank earlier used to pay more than two weeks for every one year of service in severance package for the employees having put 10 or more years.

"This amendment will apply to eligible employees, who receive written notice of termination of employment on or after January 15, 2009," the memo said, indicating that there could be more job cuts in the offing at the bank.

"As always, Citi reserves the right to amend its plans at any time," McKinnon wrote in the memo.
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