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Citi CEO Michael Corbat: Still Dealing With 'Legacy' Issues

Thursday, 24 Jan 2013 | 5:05 AM ET
Citi CEO: Europe Remains Challenging
Michael Corbat, Citi's CEO tells CNBC that Europe remains challenging but the bank sees opportunities in emerging markets.

Citigroup needs to continue to clean up its non-core "legacy assets" and focus on operating efficiency, its new CEO Michael Corbat told CNBC at the World Economic Forum in Davos.

"The good news is we looked at the fundamental drivers of the business. Our operating revenue, expenses…all things heading in the right direction," Corbat, who took the helm in October, said.

"But there was noise in the quarter. We continue to have to deal with legacy issues."

"We've got Citi Holdings. We've got some of the remnants of that to clean up. And I think we disappointed the markets in terms of our loan loss releases," he said.

"We just weren't prepared to put them out there yet," he said. The group wants more progress before it goes ahead and makes that release.

"We want to see more progress; we've had fiscal cliff, we've got debt ceiling, we're seeing improvement in housing prices and we're seeing some improvement in jobs but those are still at high levels and we need to see more improvement before we make that release," Corbat said.

(Read more: New Housing Fears)

Corbat said the bank was holding onto around $157 billion worth of legacy assets on its books, much of it made up of mortgage assets, and added there was no "silver bullet" to wipe this off Citi's portfolio.

Citi shares have been under pressure and Corbat said the group's ability to turn a corner was partly market dependent. It has already announced 11,000 job cuts.

Corbat suggested he wanted to make the group more efficient rather than announce thousands more job cuts.

"You can't cut yourself to where you want to be," he said,adding he wants his business managers to focus on operating efficiency.

"We've got to continue to work that and we're very focused on driving earnings but we have to execute," he added.

Citi has been in a cost cutting drive since the financial crisis brought it to the brink and announced late last year a further 11,000 job cuts on top of thousands already shed since 2008 as it ramped up its cost-cutting drive.

(Read more: Will Citi's Massive Layoffs Be Enough?)

He added that Citi would continue to push further into emerging markets as they were still outperforming. He also said the bank was well positioned to capitalize from a pull back by rivals.

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