I’ve just read about this headline from www.zimbio.com about American Express is planning for a retrenchment of their staff due to currrent economic crisis. First we heard Citigroup,among the top 5 Forbes 500 companies getting a bailout aid and luckily many stock traders showed clear relief after the government’s plain to bail Citigroup out.Thanks to the newly elected President Barack Obama’s pledged to enact a sizable economic-stimulus plan that have soothed investors jittery nerves.
Considered the biggest rescue of the bank,U.S government has planning to inject $20 Billion of a new capital by agreeing to shoulder most of the potential losses on $306 billion high risk assets.The current economic crisis has seen the disapperance of major financial companies such as Lehman Brothers,Bear Sterns Cos and Washington Mutual Inc.American Express, one of the major charge card issuing company,has been planning to lower the widening financial rise if their own by cutting apporoximately 7000 jobs at the management level with their aim to save around $1.8 Billion next year, according to CNN Money.Known for their generous of concern to their customers,the Amex public image will be more likely to change after some adjustment of strictening some regulations and higher financial charges.As such, it is more likely from our observation that the employment new hires will be paused and employee salary will have no usual annual increment and bonus.
Stock market moved sharply higher for a another straight session last Monday and the Market watchers reacted cautiously to the rally.By the mean time, to acknowledge that stocks had been beaten down so badly in last week’s fear-driven sell-off that any rebound was likely to be strong and more likely after the good news from Obama promises to boost the economy.At least, this good news makes people feel relief that something is being done.Under the rescue plan, the government agreed to invest an additional $20 billion in Citigroup, on top of $25 billion previously committed. It also agreed to absorb the first $29 billion in the present losses of a portfolio of $306 billion troubled assets.In addition, the government would shoulder 90% of any additional write-downs, with Citigroup takeover for the other 10%.
Chief Executive Vikram Pandit and other top management may found a new experience “in keeping their job” despite the intervention, but its the government that have the decision their future. More details on compensation may come next week, government officials said.
Not all investors were pleased. “You’re seeing an inept management team being rewarded by the U.S. government,” said William Smith, chief executive of Smith Asset Management in New York, which owns Citigroup stock.
Ridhzuan Harun
