Citicorp Slashes Dividends, Jobs During Slump

Citicorp, the nation’s largest banking company, announced a drastic reorganization plan today that will slash stock dividends, quadruple projected layoffs to 8,000 and set aside additional money to cover bad loans, resulting in a fourth-quarter loss of at least $300 million.

The announcement came against a background of one of the worst years for the banking industry since the Great Depression and followed similar steps taken by other leading U.S. banks that have been hammered by declining real estate values and a slumping economy.

Citicorp said the steps would eventually result in savings of $800 million annually and said it was announcing them to keep stockholders “appropriately informed.”

It was unclear when the layoffs would take place, but the bank had said previously it intended to lay off 2,000 workers.

Citicorp also said it was setting aside an additional $340 million for commercial loan loss reserves, after an examination by federal banking auditors. Details of the examination weren’t immediately available.

The company also said it was cutting its annual dividend by 78 cents to $1 per share.

Citicorp projected that a loss for the fourth quarter would range between $300 million and $400 million. Nonetheless, the company said it expects to report a profit for 1990 ranging between $400 million and $500 million.

The company said it would discuss the developments in greater detail after the release of its year-end results in mid-January.

Based in New York, Citicorp is the nation’s leading banking company with assets exceeding $230.6 billion.