US bank Citigroup to axe 52,000 more jobs

Citigroup said it would cut 52,000 jobs yesterday, one of the largest layoffs in history, adding to worries the global economic slump may deepen as the battered auto industry took centre stage around the globe.

After a weekend meeting of the world's 20 largest economies failed to come up with specific new stimulus measures to ease the world's financial strains, the IMF said it needed at least $100 billion in extra funding to fight the crisis.

Citigroup, the US bank with the farthest global reach, announced the biggest round of job cuts since the financial crisis erupted last year, slashing 15 per cent of its workforce in a bid to return to profitability.

The cuts come on top of 23,000 reductions Citigroup had announced earlier and only lags behind 60,000 layoffs by IBM in July 1993 as the largest ever, according to consultant Challenger, Gray & Christmas Inc.

In a bid to contain the economic fallout, the US Senate was to debate a bailout of American car firms. With a $700 billion fund promised to stabilize the battered US financial system, the outgoing Bush administration and its successor were set to tackle the urgent question of how, or whether, to rescue the nation's "Big Three" automakers.

Germany said it was ready to help General Motors Corp's Opel unit and Japan's Toyota came under ratings scrutiny. Japanese car giant Toyota Motor Co was put on a negative ratings watch by Fitch Ratings because of the global downturn and the stronger yen. It cited "unprecedented challenges" in the automotive industry.

Toyota is one of the rare companies to have a top-notch "AAA" rating.

In Europe, the German government has said it is ready to talk with Opel, but would not offer blanket aid to entire industries suffering due to the financial crisis.

Automakers have taken the brunt of the impact from a dramatic decline in US consumer spending, triggered by a housing crash and worsened by rising unemployment.

The US fell into recession in April and the downturn is expected to last 14 months, the longest since 1982, with unemployment rising to 7.7 per cent later this year, according to a survey of private forecasters by the Federal Reserve Bank of Philadelphia survey.

Britain's main employers group forecast that unemployment could rise to almost nine per cent by 2010, and France's central bank said the French economy should contract 0.5 per cent in the fourth quarter.

The euro zone is in formal recession, with two consecutive quarters of contraction.

Japan surprised markets with data showing the world's second-biggest economy fell into its first recession in seven years as the financial crisis curbed demand for Japanese exports.

China's central bank said the risk of a downturn in its economy were on the rise, and also warned that the global slowdown could hurt its exports.

Meanwhile oil dropped to $57.43 yesterday on concerns about the strength of demand.

Markets were unimpressed with the weekend meeting of the G20 in Washington, which agreed on some steps to tackle the world economy but left it to individual governments to tailor their response to their own circumstances.

The G20 statement said all financial markets, products and participants would be subject to supervision.

It also vowed tougher accounting rules, a review of compensation practices and greater cooperation between national regulators.