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Citi share price falls after bank announces $2.7bn legal costs
Shares in Citigroup have fallen by over two per cent in early morning trading, after the US bank revealed it would be taking a $3.5bn (£2.23bn) charge for legal and restructuring operations.
The charges are expected to eat up huge chunks of the bank’s fourth quarter profits, yet Citi insisted that it still expects to be “marginally profitable” for the period.
Around $2.7bn has been set aside to deal with legal investigations into the bank’s activity.
Citi traders have been implicated in the forex rate rigging scandal and the rigging of the Libor interbank lending rate.
Furthermore, in October a unit of the bank’s Mexican subsidiary Banamex was found to be involved in illegal conduct including fraud and the use of intercepted telecommunications.
On top of legal costs, the bank will take a $800m charge for “repositioning costs” as the company looks to descale its international operations.
In October Citi was forced to restate its third quarter results due to a “$600m increase in legal accruals”.
Citi chief executive Michael Corbat said:
We have made significant progress in simplifying and streamlining our company, and these repositioning actions will further enhance our ability to serve our clients efficiently and focus on those areas with the greatest potential for returns.Also, we believe these legal charges should cover a significant portion of our outstanding legal matters based on current information.
