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Updated from 11:59 a.m. EST


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deep cut to its global workforce is a much-needed move for the bloated giant, but investors and market observers are growing less confident management can steer the ship in difficult economic times.

Shares fell as much as 7% before rebounding slightly on Monday, after the New York banking titan said it was cutting approximately 53,000 more jobs over the coming quarters. Citi, which suffered massive losses from deteriorating debt, said total headcount is being reduced by 20% from its peak of 375,000 at the end of 2007; the company had already announced in October that it was eliminating about 22,000 jobs from those levels.

The plans, posted on the company's Web site, were discussed by CEO Vikram Pandit as part of the company's town hall meeting with employees in New York Monday. Ironically, the meeting was meant to rally beleaguered Citi employees.

"I have never liked the company," Cassandra Toroian, the president and chief investment officer of Bell Rock Capital, wrote in an email to

. "These cuts are a good idea. They are obviously bloated.

The organization is so big they have no idea what they have all over the world. I think the company needs to be broken up and divested and shrink down to just a U.S. bank." Bell Rock does not own any shares of Citi.

Tom Hepner, an investment advisor at Ruggie Wealth Management, says the job cuts, while unfortunate, "demonstrates very strongly that Pandit has caught on."

"This is the kind of material -- assuming that it's done intelligently -- massive kind of reduction that will help the stock long term," he says. "To me this is a real house cleaning. It's a shame that there will be a lot of talented good people out of work at this point in time, but I think for Citi's long-term survival and competitive position, it needs to do it."

Hepner personally owns shares of Citi, while the firm has some clients invested in Citi through the KBW Bank exchange traded fund.

Citi's stock rallied off its lows, briefly going positive along with the wider market at midday, but were more recently down 2.1% to $9.32.

Citi, as it struggles with its own massive writedowns from complex securities backed by soured mortgages and severe deterioration in its consumer asset classes, had outlined an internal growth strategy at an investor day earlier this year. The plan calls for the bank to focus on five main businesses -- asset management, credit cards, wealth management, retail banking and global private client.

The company is also seeking to obtain retail deposits in efforts to bulk up in cheap funding sources as the credit markets remain virtually frozen. Citi has turned to smaller

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last month.

Citi is reportedly slashing roughly 18,000 from its German and Indian operations, another 5,000 to 6,000 in yet to be disclosed asset sales and another 25,000 employees by the end of the second quarter 2009.

The job cuts, classified as "near-term" headcount reductions, may not be the last at Citi either, according to



Still Pandit reiterated during the meeting that the "global universal model is the right one" for Citi, according to



CFO Gary Crittenden said during an Oct. 16 earnings call that with the acquisition of Wachovia no longer going through, "

our focus is behind those businesses and that remains exactly as it was before."

"We're cutting our expenses, we're showing good traction on that," he said. "We're moving assets out of categories that don't fit with that profile. We've been selling businesses that didn't match there. We've carefully managed down our headcount. So we have worked very hard to execute against that strategy."

Last week, Citi was said to be in acquisition talks with both

Chevy Chase Bank

and possibly

Valley National Bank

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Toroian says the company has "no credibility anymore to get deals done" on a large scale.

Hepner says deals will not come easy for Citi, "particularly mergers for stock."

"When your capital is worth half what it was two days ago it makes doing a deal tough," he says.

"They will probably end up having to buy a bunch of smaller banks as opposed to thinking they have the ability to do large deals," she said. "I think that ship has sailed for them, they have no credibility anymore to get deals done at that large scale."

Citi has posted four straight quarterly losses, including a loss of $2.8 billion during the third quarter.

Shortly before the town hall meeting in New York, Chairman Win Bischoff said at a business forum in Dubai, United Arab Emirates, that it would be irresponsible for Citi and other companies not to look at staffing in the event of a prolonged economic downturn.

"What all of us have done -- and perhaps injudiciously -- we've added a lot of people over ... this very benign period," Bischoff said.

"If there is a reversion to the mean ... those job losses will obviously fall particularly heavily on the financial sector," he added. "Certainly they will fall particularly heavily on London and New York."

In his comments to the

Associated Press

, Bischoff did not rule out the likelihood that Citi's leaders would go without bonuses this year -- a move that would effectively amount to a substantial pay cut for the company's executives.

On Sunday,

Goldman Sachs

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said seven top executives, including CEO Lloyd Blankfein, opted out of receiving cash or stock bonuses for 2008 amid the ongoing credit crisis.

Pandit said that the company will decide on senior executive bonuses after the first of the year, according to



New York State Attorney General Andrew Cuomo said in a statement issued Monday afternoon that Citi's intention to wait "is a mistake."

"After four consecutive quarterly losses, it seems only fair that top executives should shoulder their fair share of these difficult economic times," Cuomo said. "It would send exactly the wrong message for Citigroup's top brass to collect bonuses while investors, taxpayers, and now Citigroup's own employees suffer."

Citi isn't the only major bank taking a knife to its workforce as the economy worsens.

JPMorgan Chase

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is also considering several thousand employee layoffs next year, according to Britain's

Sunday Telegraph


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