Citigroup aims to shed billions of assets

By Jonathan Stempel and Dan Wilchins

NEW YORK (Reuters) - Citigroup Inc (C.N), the largest U.S. bank, said on Friday it plans to shed $400 billion (205 billion pounds) of assets within three years and boost revenue by up to 10 percent annually in a bid to restore profitability after huge losses tied to flagging mortgage and credit markets.

Vikram Pandit, who became chief executive in December, announced the plans at a much-awaited presentation to investors and analysts. He has faced growing demands from investors to slash costs, shed poor-performing businesses, and reinvigorate a stock price that has fallen by more than half in the last year.

"The two things I wanted to hear, which we heard, were that Citigroup is shrinking the balance sheet and getting the cost structure right," said Anton Schutz, a portfolio manager at Mendon Capital Advisors in Rochester, New York. "These guys weren't defensive, they were offensive. It's a shift."

Citigroup lost nearly $15 billion over the last two quarters, and suffered more than $45 billion of write-downs and credit losses since last summer, as the housing slump deepened, subprime mortgages imploded, and credit markets tightened. More jobs will be cut, on top of 13,200 announced this year.

"It's a net positive for Citi just to shrink," said Henry Asher, president of Northstar Group Inc, a New York money manager.

Some investors believe Citigroup, built over nearly two decades by Sanford "Sandy" Weill into a behemoth now operating in some 106 countries, is too big. Charles Prince, who quit as chief executive in November, long rejected that accusation.

"Pandit is telling investors he is going to try to restructure," said Tom Sowanick, chief investment officer at Clearbrook Financial LLC in Princeton, New Jersey. "He seems to have a different heart than Sandy Weill and Chuck Prince."

In afternoon trading, Citigroup shares were down 30 cents to $24.00 on the New York Stock Exchange.