Citicorp has instructed most of its managers to trim or freeze their already Spartan expense plans as they begin the 1992 budget process, according to bank officials.

In contrast to previous years, when Citicorp spent freely in pursuit of new markets and products, managers have been frantically slashing expenses as the bank company strives to raise profits and capital. Expenses at Citicorp grew at a rate of 9.1% in 1988, 8% in 1989, and 11.4% in 1990.

Even with the austerity budgets, however, some analysts are skeptical that the nation's largest bank is doing enough to reach its expense-cutting goal.

The company last week informed officers it will give out merit increases that average 5.5% at yearend.

Will a Freeze Be Enough?

To keep pace with its expense-cutting plan, according to some analysts, Citicorp will have to lay off more staff and cut deeper into its growth plans.

"I would be disappointed if their spending was flat," said ronald I. Mandle, a banking analyst at Sanford C. Bernstein & Co. Mr. Mandle said he expects further expense reductions in 1992 of $250 million.

Citicorp has disclosed plans to trim $1.5 billion of expenses by the end of next year. In the past nine months, it has shaved about $600 million through 5,000 layoffs, asset sales, and other means.

But the company also has reinstated merit increases that were delayed last year and identified certain markets for expansion.

"If you're going to provide 5.5% merit increases, and personnel is roughly 50% of costs, it's tough to show improvement in pretax margins without laying off more people," added Charles Peabody, an analyst at Kidder, Peabody & Co.

Prospect of Further Layoffs

Citicorp earlier this year said that it would lay off about 8,000 workers. It also indicated that an 10,000 more could lose their jobs through a combination of asset sales and staff reductions.

At the end of the second quarter, the bank company employed about 90,000 people. Amy Dates, a bank spokeswoman, confirmed that Citicorp continues a drive to operate as lean as possible.

"Managers are being asked to change the way they run their businesses," Ms. Dates said, adding that "they will need to reduce administrative costs and management infrastructure."

Citicorp has been focusing its layoff efforts in its corporate banking sectors as well as in its general staff areas, such as human resources, financial control, and treasury. About 500 employees in human resources and financial control received pink slips in recent weeks. Those layoffs were first reported in Bank Letter, an industry newsletter.

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