Citigroup Said to Offer Japan's Nikko Workers Early Retirement

By Takahiko Hyuga

Nov. 22 (Bloomberg) -- Citigroup Inc., which this week said it's shedding 52,000 jobs, is seeking to reduce its workforce at its Japanese brokerage unit by offering earlier retirement to some employees, two people familiar with the situation said.

Nikko Cordial Securities Inc., which employs about 7,000 in Japan, made the proposal to employees over the age of 40 in a memo from President Eiji Watanabe yesterday, the people said, declining to be identified because a public announcement hasn't been made. The offer also includes about two years of pay, the people said.

Citigroup is cutting its workforce at businesses in Japan, including investment banking and consumer finance. The New York- based firm is reviewing global operations after reporting $65.7 billion of credit losses and writedowns from investments linked to the U.S. subprime mortgage crisis, according to data compiled by Bloomberg.

``Some talented employees may leave the firm, yet people who underperformed may stick to the company as the job market is extremely tight now,'' said Makoto Haga, president of Wing Asset Management Co., a Tokyo-based hedge fund. ``Citigroup cannot avoid a massive redundancy here in Japan as the global financial market is worsening further.''

The employees who want to accept the offer are to respond by Dec. 8, the people said.

More Effective

The Tokyo-based brokerage, which has 111 branches in Japan, holds 28.2 trillion yen ($294 billion) of client assets as of September. Citigroup acquired the brokerage, Japan's third- biggest, last year.

``Citi in Japan is always looking for ways to make our organization more efficient and effective,'' Citigroup said in a statement yesterday in response to a query by Bloomberg News. ``We also continue to carefully manage our head count levels as we reengineer the company in line with its stated goal and market realities.''

Nikko Citigroup Ltd., the investment banking unit of Citigroup in Japan, started shedding 160 positions, two people familiar with the matter said in October.

Nikko Citigroup cut 16 positions in its equity research department, including four analysts and strategists, according to four people with direct knowledge of the measures. The department stopped covering about 40 companies, according to documents distributed to clients and obtained by Bloomberg News.

In June, Citigroup offered all 1,350 employees at its Japanese consumer-finance unit early retirement with two months salary as the company withdraws from the business, according to a memo distributed to employees. More than 500 employees accepted the offer.

Nikko Cordial, which was formed in 1944, said on Oct. 27 it posted 12.1 billion yen of profit for the six months ended Sept. 30, compared with 20.2 billion yen a year earlier.

To contact the reporter on this story: Takahiko Hyuga in Tokyo at thyuga@bloomberg.net