Dec. 12 (Bloomberg) -- Sanford ``Sandy'' Weill, who spent 17 years merging banks, brokers and insurers to make Citigroup Inc. the largest U.S. financial company, said new chief executive officer Vikram Pandit may have to reverse that strategy.

``It's the new management's job to look at the world as it changes, and how do we look at change and take advantage of change, rather than put our head in the ground,'' Weill, 74, said in an interview in Frankfurt.

Weill, who retired as CEO in October 2003, said he consulted with Citigroup's board on Prince's replacement and thinks Pandit was a good selection to lead the company as it cuts jobs and decides whether businesses need to be sold or closed. The company will probably report its first quarterly loss in 16 years, after warning of as much as $11 billion of fourth-quarter writedowns on subprime mortgage investments.

Weill didn't say whether he thinks a breakup would be good for shareholders, though he said Citigroup can't avoid cutting jobs to reclaim the ``efficiency'' it had when he was in charge. Citigroup's staff has grown ``dramatically'' and ``there's room'' to eliminate positions, Weill said.

Citigroup had 327,000 employees worldwide at the end of last year, up from 253,000 in 2003, according to regulatory filings.

``It's never a very pleasant thing, but it's not a pleasant thing to have a company that's not doing as well'' as its competitors, he said. ``I've believed since the day I was born that one should be the low-cost producer of a quality product, and I think we got to a position where we weren't that.''

Five-Week Search

Pandit, a former Morgan Stanley investment banker, was selected after a five-week search that began when Weill's handpicked successor, Charles O. ``Chuck'' Prince, resigned Nov. 4 following the fourth-quarter writedown forecast.

Citigroup has lost 44 percent on the New York Stock Exchange this year, a drop Weill said made him feel ``terrible.''

``How would you feel if you lost a lot of your net worth?'' Weill said. ``Not good.''

Weill, who as a retiree hasn't had to publicly report his Citigroup holdings since April 2006, held 16.6 million shares then, according to Bloomberg data. This year's stock decline would have eroded a stake of that size by almost $400 million.

Today New York-based Citigroup dropped $1.76, or 5.3 percent, to $31.47 in New York Stock Exchange composite trading at 4 p.m.

Reviewing Businesses

Pandit, who joined Citigroup as head of alternative investments in July, said yesterday he will conduct a ``front-to- back'' review to determine which assets or businesses might need to be sold, and how many job cuts are needed. ``Nothing is off the table,'' Pandit, 50, said in an interview.

``Vikram is a very smart person,'' Weill said. ``He should be given a chance to evaluate things, come to proper decisions, look at the balance sheet, look at what makes the most sense, where we are going to get the highest returns.''

Pandit declined to say yesterday whether the company needs to cut more than the 17,000 jobs targeted by Prince. Some analysts and investors say the company, which spans at least 100 countries and has more than $2 trillion in assets, should be split up.

Citigroup has faced shareholder criticism for more than a year, including complaints in July 2006 from the bank's largest individual investor, Saudi billionaire Alwaleed bin Talal, over escalating corporate expenses. Prince responded by pledging to cut costs 10 percent by 2009 and eliminate jobs.

Alwaleed's Investment

Now Citigroup is facing its worst financial crisis since 1991, when predecessor company Citicorp had to suspend dividend payments to shareholders for three years and seek a $590 million investment from Alwaleed.

Weill lauded Citigroup for negotiating a $7.5 billion infusion from the ruling family of Abu Dhabi to bolster capital at a time when the bank had no permanent CEO or chairman. Robert Rubin, a Citigroup board member and a former U.S. Treasury secretary, filled in as chairman from Prince's resignation until yesterday, when Win Bischoff, the bank's most senior executive in Europe, was appointed to the role.

``There are 15 other financial companies that are going to find out they're going to need capital,'' Weill said. ``To be the first and to structure a deal like we did I think is something that's going to be good for the shareholders of Citi, good for the new investors, for Abu Dhabi, and good for management.''

To contact the reporters on this story: Andreas Scholz in Frankfurt at ascholz@bloomberg.net; Bradley Keoun in New York at bkeoun@bloomberg.net.

Last Updated: December 12, 2007 16:58 EST