Citigroup Inc (NYSE:C), the third largest bank in the U.S.. in terms of assets, is bracing for an additional $2.7 billion in legal charges in the fourth quarter, according to CEO Mike Corbat, at an announcement made during an investor conference in New York. Another $800 million allotted for retrenching workers and closing branches makes the company “marginally profitable, Corbat said. Analysts had made a prior estimates of $3.4 billion in fourth quarter profits for Citigroup, instead of the small profit that the company CEO has divulged.
Since Corbat has taken the reins of Citigroup Inc (NYSE:C) as CEO, the company’s expenses for legal costs has accumulated to as much as $13.3 billion, a figure representing more than 50% of the bank’s profits for the 2 years that it has been under Corbat’s charge. Company reports indicate an earnings of $21.8 billion since Corbat assumed the role of CEO. In general, profits from fixed-income trading have been declining, affecting Wall Street firms including Citigroup.
The legal costs that Citigroup Inc (NYSE:C) is facing is associated with its foreign exchange settlement, LIBOR, as well as investigations regarding the banks alleged non-compliance with anti-money laundering provisions. Recently in the third quarter, the bank have to face earnings diminished by $600 million in the form of legal costs associated with investigations. An amount of $1.02 billion was also paid last month in settlement of currency manipulation charges with U.S. and U.K. regulators. Early in March, Citigroup’s Banamex USA business have featured into a $400 million loan fraud.
News of the additional fourth quarter legal cost sent Citigroup Inc (NYSE:C) shares down 2.8%, or as low as $54.78 on Tuesday morning. It currently is selling at $55.85 a share.
This article has been written by Nonito Guntan.