(Update 1 reflects details on the joint venture released late Tuesday.) Citigroup Inc. (C) confirmed Tuesday it reached an agreement with Morgan Stanley (MS) about the joint venture of its retail brokerage business, Smith Barney, and the wealth management business operated by Morgan Stanley. The joint venture, to be called Morgan Stanley Smith Barney, will boast more than 20,000 financial advisers, $1.7 trillion in assets, $14.9 billion in combined revenues and $2.8 billion in combined pre-tax profit, serving 6.8 million households worldwide from a combined 1,000 offices around the globe. “For Citi, the joint venture provides significant synergies and scale, substantially reduces our expenses and enables us to retain a significant stake in a company that immediately becomes the industry leader with real growth opportunities,” CEO Vikram Pandit said in a media statement. But will the shift in business end with the new joint venture, which is expected to close in the third quarter? In addition to the spin-off of its brokerage business, people close to the issue told the Wall Street Journal Citi may even downsize and shift the focus of its business to two key areas — possibly corporate wholesale banking and retail banking in select markets worldwide. The expected bloodletting may involve eliminating a third of Citi’s assets, is rumored to shutter consumer-finance operations and is expected to be announced Jan. 22 as Citi releases its fourth-quarter results, according to the Journal‘s sources. A shaky foothold in 2009 Citigroup is expected to report massive fourth-quarter 2008 losses much greater than expected, but its lead independent director Richard Parsons said the bank’s board stands behind CEO Vikram Pandit, according to a Wall Street Journal report Monday. “We have confidence in the current management and leadership of Vikram,” Parsons told the Journal Sunday. He also denied recent rumors that Pandit may lose his job in light of the company recently losing Robert Rubin, according to the Journal. Citigroup has so far received $45 billion in TARP funds — a $25 billion injection through the capital purchase program on Oct. 28 as well as an additional $20 infusion through the new targeted investment program months later on Dec. 31.  The massive — and so far ineffectual — injection from the Treasury Department, combined with speculation the bank may soon begin announcing intensive restructuring plans, calls into question the bank’s ability to operate without even more bailout funds. Citi’s senior counselor Robert Rubin on Friday stepped down from his position, signaling internal trouble. “My great regret is that I and so many of us who have been involved in this industry for so long did not recognize the serious possibility of the extreme circumstances that the financial system faces today,” Rubin said in his letter of resignation to Pandit. Write to Diana Golobay at [email protected]. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.