Citigroup's new leader is repeating the bank's old tricks of cost-cutting. But this time he's targeting Citi's international identity.

Chief Executive Michael Corbat's plan to cut 4% of Citi's workforce won immediate plaudits from the market on Wednesday, sending the bank's share price soaring. But the nature of the cuts, which largely fall in Citi's global consumer banking division, suggests the bank is hedging its strategy of being an omnipresent, upper-tier player in emerging markets.

The number of jobs being slashed — 11,000 — is less significant than where the cuts are taking place. During Vikram Pandit's tenure as CEO, Citi refashioned itself as a globally successful retail, commercial, and investment bank that just happened to be tied to a then $573 billion collection of unsuccessful U.S.-centric investments.

Now more than 6,000 of Corbat's layoffs and reductions will fall on the global bank, which Citi has long argued hitched its success to those of affluent urbanites in emerging markets. The bank plans to limit or shutter its consumer operations in such places as Turkey, which posted an 8.5% GDP in 2011, and Uruguay, which grew by 5.6% last year. In Turkey, Citi will curtail a 37-year relationship; in Uruguay, almost a century of doing business.

In a speech at a Goldman Sachs investor conference in New York Wednesday, Citi Chief Financial Officer John Gerspach denied that Citigroup was rethinking elements of its international strategy. Countries such as Turkey and Uruguay are "geographies with low return potential," he said, but Citi would not pull out of them entirely.

"We are maintaining our institutional presence" to serve corporate clients, he said.

Citi is even scaling back in in its more established markets, cutting branches in Brazil, Hong Kong and even the United States.

Branch "optimization" in places like Brazil should not be seen as a sign that Citi has lowered its expectations for those markets, Gerspach said, adding that the cuts will reduce Citi's revenue by just $300 million a year.

In all, Citi plans to eliminate 84 branches, including 44 in the U.S.

Though incremental, cuts to the bank's emerging markets presence is a departure from recent bank strategy, analysts say.

"As people looked across the banking universe, Citi was known as the bank to go to when you want international exposure, when you want to diversify away from the big money-center banks in the U.S.," says Jason Ware, an analyst with Albion Financial Group in Salt Lake City.

But in the wake of economic slowdowns in emerging markets and Europe's ongoing debt crisis, "I'm not sure that the idea of spreading yourself thin across the globe is necessarily good strategy anymore," he adds.

Given Corbat's recent arrival and his track record of jettisoning unwanted businesses at Citi Holdings, it's tempting to view the cuts as a new CEO making his mark on Citigroup. But a layoff-focused strategy is hardly a break from the status quo for the bank, which has repeatedly culled of its staff since the financial crisis. Pandit eliminated some 100,000 jobs during his five years overseeing the bank; at this time last year, he announced plans to cut 4,500 more people, citing "an extremely challenging operating environment" that "will likely significantly affect the competitive landscape" for years to come.

Citigroup investors stopped believing the bank's size was a benefit years ago, with the bank long trading at a large discount to its $56-per-share tangible book value. Investors reacted with enthusiasm to the announced cuts on Wednesday, sending shares up more than 6% by midday, to $36.42.

Longtime bank watchers were less impressed.

"Certainly you want to be as efficient as you can in the competitive banking world, but it doesn't cure the long-term issues that have been nagging Citi for years. … Cost-cutting is just a component, and a smaller component to that," says Cliff Rossi, a former chief risk officer for Citi's consumer lending group and a teaching fellow at the University of Maryland's Robert H. Smith School of Business.

"This is a journey for them, this is not something … where we miraculously see Citi emerge newer, stronger, leaner, meaner. It's going to take years," he said.

After Citigroup famously lost out to Wells Fargo (WFC) on a deal for Wachovia's branches during the financial crisis, Pandit turned the bank's focus to its overseas operations. In October, hours before he was fired, he told investors and analysts that the bank's "unique footprint" in international and emerging markets "gives us a meaningful competitive advantage."

Now Corbat is pulling back in those markets.

"Fundamentally Citigroup needs to figure out what its real strategy is as a bank," Rossi says. "They have great potential to be that international bank, but what's lacking is putting together a real coherent strategy around that."

Corbat's new plan does not appear to affect Citi's stop-and-go efforts to dispose of unwanted assets in Citi Holdings. The bank has long tried to avoid firesales, holding onto some businesses indefinitely if it cannot find a buyer willing to pay a decent price.

At the Goldman conference on Wednesday, Gerspach updated investors on the bank's disposition of assets in Citi Holdings. The pace of sales has slowed, he said, because of the limited ability of non-banks to finance significant purchases of mortgages and other assets.

"The depth of the funding market does not support a sizable transaction," he said, and financing a buyer's purchase would simply replace asset exposure with an indirect form of the same risk. Also hampering the speed of asset reductions is the bank's desire to build regulatory capital. Losses on sales are much more palatable if they don't set that effort back, Gerspach said.

"We have been willing to take a loss where the impact on regulatory capital is offset or mitigated by a sufficient deduction in risk-weighted assets," he said.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.