Vikram Corbat

Last Updated: Fri, Dec 07, 2012 07:41 hrs

pMike Corbat is picking up the machete left behind by his predecessor Less than two months after replacing an ousted Vikram Pandit in the corner office Citi&rsquos new boss announced on Wednesday he&rsquos slashing 11000 jobs That won&rsquot endear him to staff But it&rsquoll reap savings of at least 11 billion a year a handy fillip for a firm consistently earning less than its cost of capitalppThe strategy isn&rsquot new though Pandit had been wielding the knife since taking over at the end of 2007 As with previous trimmings this round is also no panacea The cuts represent just over 2 percent of expected costs this year after annualizing numbers for the first nine months of 2012 That&rsquos enough after tax to add around half a percentage point to the bank&rsquos return on common equity &ndash still leaving Citi short of breaking evenppCorbat&rsquos first big move is hardly radical either The bank is shuttering retail operations in several countries including Turkey Pakistan and Paraguay and closing a few dozen branches in the United States But Citi&rsquos general structure and scope remain the same with the changes reducing annual revenue by just 300 million Some of the paring is also thanks to a decline in bad loans and an increase in automation in businesses like trading These would have prompted layoffs regardless of a special cost-cutting planppThe importance of the steps is still evident for a new boss so early in his tenure It shows shareholders a willingness to make tough decisions And it surely also won&rsquot be lost on the Federal Reserve which is about to consider plans from Citigroup and other large US banks to return capital to investorsppSo far though Corbat looks to be doing little more than tweaking Pandit&rsquos strategy That&rsquos fine for now With a very active chairman in Mike O&rsquoNeill &mdash the man who evidently forced out Pandit &mdash looking over his shoulder Corbat will undoubtedly have considerably bigger moves to makep

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