Over the next couple of years, Citigroup Inc. plans to hire about 500 employees in its capital markets operations, including its investment banking and trading operations, a spokeswoman said.

That relatively small addition to a huge capital markets group suggests Citi is not yet ready to rely on new hires to become a bigger securities underwriter and deal adviser.

Citi wants to hire selectively, especially in the equity businesses, to be better equipped to serve the capital markets needs of the large number of multinational corporations. "We're making substantial investments in our businesses," John Gerspach, Citi's chief financial officer, said during a conference call earlier this month. "In the first quarter, investments exceeded $500 million, including technology, branches, marketing and new corporate and investment banking hires."

JMP Securities analyst David Trone said, "Obviously they downsized the securities unit a good bit during the crisis, and now it makes sense to expand the staff as activity levels are now clearly recovering."

Citi's securities and investment banking operations were at the heart of the bank's problems with outsized risk taking. When the financial crisis began, Citi got stuck with worthless securities and loans it had intended to sell.

The failed strategy of excessive leverage and dependence on transactions, rather than focusing on services for banking clients, resulted in a sharp reversal. The business shed thousands of employees and cut loose more than 10,000 clients with whom Citi lacked an extensive relationship.

Citi said the new strategy of focusing on clients that use multiple Citi services and buy multiple products is working. Last year, Citi added to its securities staff roughly 25,000, including investment bankers, traders and sales staff, to accommodate a resurgence in debt issuance. Overall, Citi has about 265,000 employees.

The 500 it will hire over the next couple of years are intended to beef up operations broadly, including the equities business, where Citi said it has weaknesses, and will likely also offset attrition.

The market rebound last year revealed Citi's loss of market share in several businesses. Citi is the eighth largest stock underwriter, according to Dealogic, and is seventh in debt underwriting.

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