Citigroup falls on concern job cuts won't fix bank

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NEW YORK (Reuters) - Citigroup Inc shares fell as much as 6.4 percent to a nearly 13-year low on Tuesday amid concern that a plan to shed 52,000 jobs might not go far enough to restore the banking giant to health.

Chief Executive Vikram Pandit announced plans on Monday to eliminate the jobs by early next year in an effort to reduce operating costs at the second-largest U.S. bank by up to 20 percent in 2009.

About one-half of the jobs will be cut through asset sales, and one-half through layoffs and attrition. The reductions would reduce CITIGROUP (C.NY)s work force to 2005 levels.

Citigroup offered few specifics on where the cuts will be made, except to say that they will be global and affect a wide array of business lines. Some analysts believe the New York-based bank may be hard-pressed to turn a profit in 2009. Citigroup has lost $20.3 billion in the last four quarters.

"The earnings picture is likely to be tough until there are signs of a stabilization in consumer credit quality, which at this point appears unlikely until at least the back half of 2009," CreditSights Inc analyst David Hendler wrote.

Richard Bove, a Ladenburg Thalmann & Co analyst who rates Citigroup stock as "buy," said investors "still do not trust the company's balance sheet," and focused on the cuts as a sign of more troubles ahead, especially given the bank's exposure to many non-U.S. economies that are also under pressure.

He said investors should instead focus on the bank's diverse operations, which rivals cannot replicate.

"This leads to the conclusion that despite loan losses and writedowns, earnings will recover," he wrote. "If this is the case, this stock is cheap."

Citigroup shares were down 33 cents, or 3.7 percent, to $8.55, after falling as low as $8.32 earlier in the session on the New York Stock Exchange. They fell to a 13-year low of $8.28 on November 13.

Through Monday, the shares were down 70 percent this year. Citigroup is a component of the Dow Jones industrial average <.DJI>.

(Reporting by Jonathan Stempel; editing by Jeffrey Benkoe)

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