Citigroup's current bonus system is the cause of in-fighting and less co-operation between divisions at the bank according to CEO Vikram Pandit.

In good times the bonus system is like an uncontrolled spigot dispensing the alcohol to a bunch of drunk party-goes. Citi's CEO seems to think cutting back will sober everyone up and make communicating with each other better. What it will most likely do is nothing, but the CEO has to look like he's on top of things and coming up with big bold ideas. The FT article states:

The move is part of an ambitious plan by Vikram Pandit, chief executive, to restore Citi’s battered fortunes by harnessing synergies between its investment banking, commercial banking and wealth management divisions.

The system will most likely be in place by the time bonuses are decided for 2008 according to the article.