Achieving operational efficiencies - which inevitably means further headcount reductions - form the core of Citigroup's three-year turnaround strategy, unveiled Friday by Chief Executive Vikram Pandit. While Pandit didn't say how many more positions would bite the dust, he and top aides left little doubt the workforce is set to shrink further, especially in back-office areas such as information technology. For instance, Pandit indicated Citi's 16 separate database centers, which employ about 25,000 people, could be combined into just two or three centers, according to The Wall Street Journal. The CEO portrayed such consolidation as unfinished business from the 1998 merger that created Citigroup out of the former Citicorp and Travelers.

Separately, Citigroup reportedly is forming an alternative-asset group by combining its private-equity and infrastructure advisory groups into a single unit within the investment bank. According to an internal memo published by the New York Times, the group will be headed by Chad Leat as chairman and Brad Coleman as global head. According to Bloomberg, Kamal Tabet, who oversaw private equity advisory, is taking a sabbatical for the rest of 2008. John Burnham, who was in charge of the infrastructure team, will retire.

Citi also picked leaders for its technology investment banking team, whose co-head Christopher Varelas is leaving to join venture capital / private equity firm Bigwood Capital. Ben Druskin becomes global co-head of technology, media and telecommunications banking, The Wall Street Journal's DealJournal blog reported. Druskin will also continue in his current role as head of East Coast technology investment banking. At the same time, Citi picked Ivan Brockman and Stu Goldstein as the first official co-heads of its 45-person West Coast tech-sector advisory group.

UBS will lay off as many as 2,600 people from its investment bank over the remainder of this year, and cut 2,900 more jobs throughout the company by the middle of 2009. The casualties include the Swiss bank's entire 300-person U.S. municipal bond department. The cuts were outlined in the bank's first-quarter results announcement. UBS expects to end 2008 with around 19,000 investment bank employees, a reduction of up to 2,600, with layoffs making up "the large majority." Firm-wide, UBS estimates it will have 5,500 fewer employees by mid-2009. Later, TheStreet.com reported as many as 400 individuals were fired last week from UBS's institutional equity sales and structured insurance products groups.

First Marblehead Corp., which securitizes banks' student loan assets, laid off 500 employees after Bank of America stopped doing business with the company. The firm tied the layoff with a bankruptcy filing by an unrelated, not-for-profit entity, The Education Resources Institute (TERI), which guarantees student loans against default. Bank of America, which reportedly accounted for about 15 percent of First Marblehead's sales volume, had a provision that allowed it to end its relationship with First Marblehead if TERI went out of business.

Peter S. Kraus became the latest in a string of former Goldman Sachs executives to join Merrill Lynch's inner circle. A former head of firm-wide strategy, co-head of investment management, and co-head of the financial institutions group in his 22 years at Goldman, which ended in 2001, Kraus joins Merrill as executive vice president responsible for business strategy and investments, global growth and corporate acquisitions.