Vikram Pandit, the chief executive of Citigroup, has announced plans to shed $500 billion (£256 billion) of assets but has rejected pressure to break his sprawling banking conglomerate in two.

As Mr Pandit revealed his long-awaited strategy for the group to a subdued room of about 500 people in Citigroup’s Park Avenue headquarters in New York, he said that he would be sticking with the “global, universal bank” model because the vast network of relationships it had brought was unrivalled in the financial services industry.

However, he conceded that the 1998 merger between Citicorp and Travelers Group had not been handled as well as it could have been and that it was essential to improve efficiency in a group where “each business is operating with its own back office and middle office”. He added that he would slim the group down into a more manageable entity by selling many of the assets on its balance sheet and some of peripheral units.

Mr Pandit aims to improve efficiency in part by integrating the bank’s disparate businesses that at present employ 140,000 IT and operational people scattered across the group, use 16 database standards and 33 client management systems. He aims to achieve a total of $15 billion of what he called “reengineering benefits” in the next three years, mostly through the cost cuts that will result from consolidating the businesses.

Mr Pandit said that he would sell or allow to run-off about $500 billion of so-called legacy assets, or 22 per cent of the group’s total, mostly over the next two to three years.

Just under half of these are assets such as mortgages and mortgage-backed bonds and just over a third relate to high-risk assets such as collateralised debt obligations (CDOs), or pools of securities. Just under one fifth of the wind-down will come from the sale of “noncore” Citigroup units.

The bank would not say which businesses it would sell, although it pointed out that it had already made three disposals of such assets this year. They are CitiStreet, an employee-benefit consultancy, the Diners Club International credit card network and CitiCapital, a provider of leases and financing for industries such as health and construction.

Mr Pandit pledged to stick with the bank’s five main areas of business: wealth management; credit cards; consumer banking; securities and investment banking; and transaction services. He argued that, if properly managed, the bank’s global network gave it a huge advantage over its competitors. For example, Citigroup carries out a range of services for Shell in 50 countries and no other bank could do that, Mr Pandit said.

In the developing world, which is key to Citigroup’s growth plans, the need for a broad offering is even more pronounced, he said. “Capital markets are much less developed in emerging markets, so you need deposits for funding. It makes complete sense to have a retail and investment bank together.”

The number of middle-class residents in emerging market countries is forecast to have grown from 400 million in 2005 to 1.2 billion in 2030, Mr Pandit said.

Henry Asher, president of North-star Group, said: “It is a net positive for Citi just to shrink. It’s too big for management to get their hands round.”

Citigroup yesterday unveiled its “Citi never sleeps” tagline to reinforce the idea that the bank is a worldwide, and thus 24-hour, operation.

Citigroup’s shares fell by 67 cents yesterday to close at $23.63.

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