The U.S. bank, which said last week that job cuts already underway across all its businesses would total about 5,000, invested just under $1 billion in its investment bank last year, as it rebuilt the unit after the 2008 financial crisis.

But Chief Financial Officer John Gerspach told investors in a conference call on Tuesday that revenues in certain parts of securities and banking in 2011 had been "disappointing and unacceptable" and pointed to more possible cuts.

"While we are strategically committed to securities and banking, we are not oblivious to the fact that our cost structure cannot be justified by our current revenues," Gerspach said, according to a transcript of the call.

Gerspach added that while the bank would not rush into decisions around cutting expenses and capacity, it would not delay them "in the name of long-term strategy."

Last week Citi, the third-largest U.S. bank by assets, reported a 29 percent drop in securities and banking quarterly revenues, excluding the accounting impact of changes in the value of the bank's debt.

The unit includes investment banking, private equity and hedge fund operations.

Like many rivals, it was hurt by the euro zone crisis, which battered capital markets in the latter part of 2011, denting trading income and discouraging clients from borrowing and doing deals.

Citi, which has about 266,000 employees, took a charge of about $400 million in the fourth quarter for severance costs as it slashes jobs. Roughly a fifth of the cuts it has announced so far are to fall in the securities and banking business.

A big round of redundancies began in Citi's London operation in early December, with bankers in advisory jobs, equities and fixed income laid off.

Other have also been slashing headcount, particularly in their investment banks, with redundancies announced at major firms already reaching well over 130,000 since the mid-2011, according to a Reuters tally.

With fourth quarter results among U.S. banks showing another strained three months for trading businesses, and euro zone debt troubles still unresolved, headhunters and bankers have been predicting for weeks that cuts would continue well into 2012.

Many banks have been accelerating layoffs in the past month, ahead of the annual around of bonus payouts, but more rounds could follow by the end of the first quarter, industry sources said.

Citi's U.S. rival Morgan Stanley made many of its planned 1,600 layoffs in January, with staff in credit and equities sales and trading hit hard.

(Reporting by Sakthi Prasad in Bangalore and Sarah White in London; Editing by David Holmes and Mark Potter)

• A Permanent Economic Emergency