Citigroup is ramping up efforts to slash its huge technology costs, with the bank’s management believing it can save significantly more than $1bn in 2009 by integrating hundreds of systems that have been separate for years.

The move underlines a shift in strategy being championed by Vikram Pandit, chief executive, in order to rebuild a company that has suffered billions of dollars in losses and has been repeatedly bailed out by the government. Mr Pandit is striving to shrink the troubled bank’s balance sheet and create a more cohesive company out of businesses that have never been fully integrated since the 1998 merger between John Reed’s Citicorp and Sandy Weill’s Travelers.

Citi had originally estimated it could save $3bn over three years by rationalising its operations and technology functions, which employs 140,000 people including 25,000 software developers – more than many IT companies. But recent progress in reducing overlaps between systems and linking IT infrastructure across businesses that had previously run individual systems has prompted Citi executives to sharply increase its cost-saving target.