Citigroup is reaching for the scalpel, and hoping that the surgery will be life-saving. The financial giant plans to separate higher-risk businesses and put them together in an isolation unit away from the core bank, with the aim of disposing of them when it can. The move casts doubt on the financial supermarket model of which the behemoth has been the most conspicuous example. Even more importantly, if splitting off the more poisonous assets looks like working, it could prove a template for other troubled banks.

The break-up comes just a decade after Citi was created by the 1998 landmark merger of Citicorp and Travelers in 1998. It is such a departure from Citi’s previous approach that the US government must surely have had a hand in it. Good. The injection of $45bn by the taxpayer in October and November last year should carry some entitlement to insist on capital-raising and streamlining the vast Citi portfolio. Inevitably this means selling a number of better quality businesses – such as the 51 per cent of Smith Barney that is going to Morgan Stanley – as well as hoping to offload undesirable assets.