Here's a "man bites dog" story for you.

A hotshot banking executive recently fought to shrink the size of his own office by over 40%.

That executive is Citigroup (C 2.50%) CEO Michael Corbat.

According to an article in The Wall Street Journal a few weeks ago, barring delays, his office space has now shrunk from over 600 square feet to 360 square feet -- still roomy, but downright humble by Wall Street standards. In fact, he doesn't technically even have an office anymore.

Corbat is leading by example in support of his plan to consolidate upper management into an open-plan workspace, which should not only literally break down walls between people, but also save Citi money.

To put this story into perspective, recall former Merrill Lynch CEO John Thain's $1.2 million office redecoration, complete with an $87,784 rug and a $35,115 "commode on legs."

It's not time to nominate Corbat for the Nobel Peace Prize or anything, but in the entitled, status-conscious world of big banking, this anecdote stands out.

What this tells us about Citi's management
Of the major banks that are still surviving, Citigroup's historical management record during the last couple decades is perhaps the worst. Here are three of its greatest hits:

  • In 1998, Citicorp merged with Travelers Group to form Citigroup, becoming the use case that helped Citi and other banks effectively lobby for the repeal of the Glass-Steagall Act. Since then, humbled by the resulting financial crisis a decade later, both then-Chairman Sandy Weill and then-CEO John Reed have basically said, "My bad."
  • On the eve of the housing bubble's crash landing, Chuck Prince, then CEO, uttered perhaps the definitive quote on Wall Street's bubble mentality: "When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you've got to get up and dance. We're still dancing,"
  • When the music stopped, Citi was the big bank that received the most government aid -- $45 billion plus guarantees on $301 billion in toxic assets.

If we're to give a bank like Wells Fargo (WFC 1.25%) credit for its historically conservative culture, then it's hard to discount the growth-at-any-risk past of Citigroup, which spanned many years prior to the fall of Glass-Steagall. After all, Corbat's entire three-decade career has been at Citigroup or companies that became Citigroup.

Still, reports of the aforementioned office overhaul, and of leaders buying shares on the open market, have me wanting to believe.

And the fact that Corbat was handpicked by Citi Chairman Michael O'Neill, who turned Bank of Hawaii into a profit machine, gives him massive credibility. Recall that as CEO from 2000 to 2004, O'Neill doubled Bank of Hawaii's return on equity from average (around 10%) to extraordinary (around 20%). The lasting cultural effects must have lingered, because Bank of Hawaii's annual return on equity has remained between 14.8% and 28% ever since.

Last, and perhaps most important, is Citi's dedication to shedding bad assets and bad businesses. It's now 27% smaller than it was at its peak in 2007. Now, almost a decade later, Citi continues to patiently shrink and simplify itself. Compare that to its closest peers, Bank of America, JPMorgan Chase, and Wells Fargo (WFC 1.25%). Each has overtaken Citi in asset size -- most notably Wells Fargo, which has more than tripled over the same period.

See this in picture form below (compare the blue and yellow lines):

Would I prefer it if Citigroup had a history of outstanding management and had capitalized on the financial crisis like Wells Fargo has? Of course. But if that were the case, Citi wouldn't be trading for around 60% of book value and two-and-a-half times cheaper than Wells.

So, as we see improvement in key metrics like return on equity, leverage, and bad debt percentage, I'll comfort myself with some promising signs that Citi finally has leadership that is capable, thoughtful, and even good.