German Government Announces $670 Billion Bailout Package

Germany announced Monday that it has assembled a bailout package worth over $670 billion to shore up the country’s ailing financial system as part of an integrated European financial rescue effort.

The German finance ministry estimated the total figure to be $671 billion. The ministry said the package plans for up to $536 billion, in guarantees for banks, and $134 billion, to recapitalize banks and back up the guarantees.

The aim of the bailout is to create a viable financial instrument that will address Germany’s current liquidity shortages in a timely fashion.

The ministry said that aid would be available to both German financial institutions and German units of foreign banks.

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Circuit City to Close 155 Stores, Lay Off Thousands

Rumors are swirling across the ‘Net that Circuit City plans to shutter at least 155 stores, beginning the process as early as Monday morning (Nov. 3).

According to various sources, the electronics giant is pulling out of at least a dozen major metro areas, and bringing liquadators in to shut down the stores.

Among the first two services to get the axe will be Circuit City’s Firedog service and their car stereo installation shops.

The rest of the store, employees, merchandise, and all, will be out the door by the end of December.

This news should not come as a great shock - it was only a handful of days ago that the Wall Street Journal ran an article about Circuit City planning to downsize, and most recently, the company has said that it has been warned about being delisted from the New York Stock Exchange, due to a share price below $1 for over 30 days.

No news on severance packages or benefits for laid off employees has been announced yet.

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Yahoo! to Cut 1,500 Jobs

Yahoo! Inc. (YHOO: 10.80 -0.18%) announced today that it will hand out at least 1,500 pink slips to workers as it struggles to deal with a crumbling economy that ate away at its third-quarter profit.

The layoffs outlined in the announcement represent about a 10% reduction in Yahoo’s staff of about 15,000 employees. It is the second time in nine months that Yahoo has undertaken mass layoffs.

Business got much worse in the third quarter as Yahoo earned only $54.3 million, or 4 cents per share. That was a crash of nearly 65% from the $151.3 million it was bringing in at the same time last year.

The average earnings estimates from analysts was 9 cents per share.

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UK Nationalizes Royal Bank of Scotland (RBS)

The UK government has nationalized the Royal Bank of Scotland (RBS) late Sunday night, by injecting about $35 billion of taxpayer money into the failing bank.

The Government is also expected to take over HBOS soon as well, as state ownership in the British financial sector becomes the most far-reaching since the World War II. Initially, HBOS was going to have been taken over by Lloyds TSB, but that deal all but collapsed on Saturday.

In addition to the RBS and HBOS purchases, the government will also guarantee interbank lending. The scale of these recent nationalizations eclipses the bailouts of Northern Rock and Bradford & Bingley earlier this year, and also represents a huge risk for the taxpayer.

Fred Goodwin, CEO of RBS is expected to step down on Monday, and Andy Hornby, CEO of HBOS, will likely resign as well.

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Legg Mason Plans Layoffs

Legg Mason Inc. (LM: 15.77 +0.77%) announced yesterday that it will soon be cutting jobs.

The Baltimore company has not yet provided specifics on positions and numbers yet, but is busy trying to come up with about $120 million in cost savings.

A company spokesperson has been quoted in the press as describing the layoffs as “surgical” in nature, rather than a broad swath of Legg’s employees.

Legg Mason is Baltimore’s third-largest public company, and employed about 1,100 people as of January 2008.

Legg’s performance has come under fire from analysts and investors lately, and the company posted its first loss in 25 years in May. Its second quarterly loss came this past July as the credit crunch took hold, and it lost nearly $104 million in its fiscal second quarter, its third straight quarterly loss.

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Goldman Sachs Lays Off Thousands This Week

Goldman Sachs Group (GS: 64.55 -3.27%) notified about 3,200 employees yesterday that they have been laid off, part of previously announced plans to cut about 10% of the firm’s work force amid crashing financial markets.

Goldman has been letting people go left and right all year. The bank handed out hundreds of pink slips to its M&A support staffers and junior bankers back in June due to market conditions on the heels of a round of leveraged lending and mortgage securities layoffs in April.

Early in the year, Goldman also cut over 1,500 people following the results of their 2007 performance reviews.

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Citigroup Will Cut 50,000 Jobs

Citigroup (C: 9.48 -0.42%) announced today that it is planning to slash its workforce by more than 50,000 jobs in an effort to cut costs and ride out the credit crisis on Wall Street

In an announcement and investor presentation (link to presentation below) on its Web site, Citi said that it was planning to reduce staff levels to roughly 300,000 employees. Citi currently has about 352,000 workers.

It was not yet clear what parts of the banking giant would sustain the most cuts, but there have been rumors that pink slips will be handed out in the investment banking and wealth management departments.

Citigroup’s CEO Vikram Pandit is expected to hold a “town hall meeting” for employees later today to address the job cuts.

This effort is another example of how Citigroup is attempting to cut costs in the wake of the credit crisis. Over the past year, the bank has already slashed its payroll by over 23,000 workers.

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