Citigroup closer to break-up

Morgan Stanley could take a 51 per cent stake in the division, which has been described as one of Citi’s “crown jewels�, after Citi was pressured to raise capital by the US government.

Observers now believe that CEO Vikram Pandit will now split up the business into what will essentially become “good� and “bad� banks – the latter loaded with $600bn of toxic debt.

It is a reversal of the policy of Pandit’s predecessor – Sandy Weill – who built the Citi empire by bringing together retail and private banking as well as old style City functions such as brokering and investment banking.

As recently as November Pandit said he believed in the “financial supermarket� model but the bank, once the world’s biggest, has been suffering from a lack of capital. It is possible Citigroup will return to its retail and commercial banking – the old Citicorp operation.

Meanwhile, another Wharf-based bank – Barclays – is to shed 2,100 jobs in its investment banking and wealth management businesses. It will also shed another 2,100 in its retail division.

Barclays Capital will lose 1,300 posts, 500 will go at Barclays Wealth and another 370 at Barclays Global Investors. Around 500 of the jobs will be lost in the UK, according to the Unite union.

The bank confirmed it had begun a “process to reduce headcount� as it looks to cope with “difficult market conditions�. The redundancies account for around seven per cent of Barclays global workforce in its investment arm.