Still No Vision at Citigroup

Another day, another 6,500 job cuts at Citigroup's investment bank. (For reference, that's pretty much exactly the total number of employees that Salomon Brothers had in the early 1990s. Now, it's just 10% of the investment-banking workforce at Citi.) But for all that the cuts will be big, it's worth pointing out that they're still tactical rather than strategic.

Underperforming divisions are being pared; outperforming divisions like "Citigroup's lucrative transactions-services arm" (no, I'm not entirely clear what that is either) will be spared. This is all pretty standard stuff for any investment bank: if revenues are falling, and you want to keep your payroll down to about 50% of revenues, then you're going to have to fire quite a lot of people.

What we're not seeing here is any indication of how Citi's investment bank fits into Vikram Pandit's vision for Citigroup as a whole. Are some parts more strategically important than others? Is Citi making any long-term bets on the future of the banking industry or even on its own future direction? Is the evolution of Citigroup going to be driven from the top down, by senior executives, or is it rather going to be driven from the bottom up, by dint of whichever groups happen to be making a lot of money at the time?

At the moment, clearly, it's the latter. And hopes for any sign of the former are rapidly evaporating. Cost cutting isn't a strategy, it's a tactic. I wonder whether Pandit really understands that.