Most people wait until January to launch into a crash diet but Citigroup’s health kick is already overdue says Lex. With the bank’s share price down 70% this year and trading at less than half its book value per share, chief executive Vikram Pandit has plans to shed 20% of the bank’s workforce and slash costs by about the same extent. A headcount target of 300,000 will help Citi to refrain from snacking on the odd new hire here and there. It should also focus the management team on budgetary challenges in 2009. Meanwhile, the magnitude of the job cuts puts Citi ahead of some peers, perhaps with less blubber to lose, who have announced cuts of about 10%.Ultimately, Citi’s target weight merely takes it back to the end of 2005, implying about a 10% drop in net revenues from its 2006 peak. A 20% fall in revenues would take the bank back closer to 2003 levels, when it had a mere 250,000 staff. The slimming plan may give Citi more manoeuvrability, or even make it more attractive to a peer. But it falls short, in Lex’s view, “of a fundamental makeover”.
