Citigroup chairman says 'major work' done in shedding assets

By David Henry

NEW YORK (Reuters) - The chairman of Citigroup Inc said on Wednesday that the company had already done the "major work" in shrinking the bank down to a profitable core and that directors are confident in the current strategy.

Responding to questions at the company's annual meeting about whether the bank should be broken up, Chairman Michael O'Neill said he believed Citigroup will earn more than its cost of capital after executives carry out plans to make its global operations more efficient and deal with issues left from the financial crisis.

"The major work has been done" in shedding assets, O'Neill said, referring to the reduction of Citigroup's set of troubled assets known as "Citi Holdings" to 8 percent of the balance sheet, down from a peak of more than 40 percent.

He also cautioned that he expected "mid-course corrections" in the strategy along the way.

O'Neill, in response to a question, said his relationship with new Chief Executive Michael Corbat is good for the company. "I work closely with Mike...I am not intrusive, but I am interested," O'Neill said.

In October, O'Neill led the board in pushing out former CEO Vikram Pandit and replacing him with Corbat. Since then some observers have wondered if O'Neill, himself a former bank executive, was dictating too many executive decisions.

Corbat, when asked what regulators might do to the company if it had a trading loss like the "London Whale" derivatives debacle at JPMorgan Chase & Co , said, "The way we run our institution is different from JPMorgan." (Reporting by David Henry; Editing by Leslie Gevirtz)