Citicorp will deemphasize traditional local-business banking relationships to concentrate on doing business with companies that require international services, chairman John S. Reed said this week.
Speaking to analysts, Mr. Reed gave few details of the corporate strategy shift but said it will take 12 to 18 months to complete.
The reorientation will leave $250 billion-asset Citicorp doing "less purely local and less domestic" corporate banking business, Mr. Reed said.
And he predicted that the tighter focus on serving a select group of some 1,000 companies worldwide will lead to "a smaller asset sheet, smaller risks, and better growth."
The chief executive described the reorganization as part of broader change in corporate philosophy at a bank that has been run in recent years as a group of semi-autonomous entities that were free to expand as opportunities arose.
"We tended to run the company to take up space," Mr. Reed said. "Traditionally, there was no centralized strategy."
The refocusing will help Citicorp develop "those areas where we bring a sustainable advantage," he added.
"There's clearly overcapacity in the banking business," he said, "and we don't want to be a me-too-product bank."
While becoming more selective on the corporate side, Citicorp said, it plans to continue building its biggest profit generator: international consumer banking and related operations like credit cards, especially in developing markets where the profit margins are highest.
Mr. Reed noted that consumer banking brought in around 70% of Citicorp's $3.2 billion in earnings last year, and that consumer banking income is expected to grow twice as fast as corporate income.
Mr. Reed likened Citicorp's global distribution of consumer banking services to efforts by multinational brands like Coca-Cola, Marlboro, or Levis to expand worldwide.
"We're witnessing a large consumer market emerging around the world and we, like others, are trying to sell into this market place with a globally branded consumer product," Mr. Reed said.
Within the United States, Mr. Reed said Citicorp's three top priorities are to be a principal consumer bank, develop its card business and investment products, and serve the high end of the corporate market. The bank also will retain its mortgage origination business as a service to branch customers even if the business "is a dog," he said.
In contrast to some other big U.S. banks, New York-based Citicorp has no intention of expanding investment banking and capital market operations beyond what Mr. Reed said is needed to assist corporate customers.
"We don't bring anything unique to the middle market," he said of another common market trend that Citicorp will bypass. "We're not interested in the middle market nor in becoming an investment bank or a Wall Street house."
He also suggested Citicorp is unlikely to acquire another sizable commercial bank.
"In a nutshell, Reed is saying the bank will forego some opportunites and that Citicorp is a bank that makes choices," said David S. Berry, a banking analyst with Keefe, Bruyette & Woods Inc., New York.
On another topic, Mr. Reed said Citicorp's goal is to boost Tier 1 capital by some $400 million, to 8% of risk-weighted assets from around 7.8% currently, and further build reserves. He also raised the possibility Citicorp might do a stock buyback and boost its dividend.
"The key message is that the company is being managed for performance," Mr. Berry said.
However, some analysts said there have often been gaps between Citicorp's stated goals and what it actually achieved.
"They're trying to do less things for less people and make more money doing it, but with Citi, there's always been an issue of implementation," said Raphael Soifer, an analyst with Brown Brothers Harriman. "They've always been better at articulating visions than implementing them."