Citigroup To Take Billions In Charges On Argentina, Russia And Restructuring

(RTTNews) - Citigroup Inc. (C) disclosed in a regulatory filing that it set aside $1.3 billion in reserves during the fourth quarter, attributing it to heightened transfer risk linked to exposures outside the U.S. This move was prompted by concerns about safety and soundness under U.S. banking law, particularly in response to cross-border and cross-currency exposures in Argentina ($720 million). The decision was based on prevailing economic trends, currency devaluation, and geopolitical risk that could affect Argentina's ability to meet external debt obligations. In addition, reserves of $580 million were allocated for prolonged political and economic instability in Russia.

Additionally, Citi's fourth quarter of 2023 pretax result was impacted by certain items previously discussed by Citi, but which have now been finalized.

Citi said it recorded an about $1.7 billion charge to operating expenses in the fourth quarter related to the Federal Deposit Insurance Corporation special assessment. Previously it was estimated to be up to $1.5 billion in Citi's third-quarter of 2023 Form 10-Q, and subsequently estimated to be about $1.65 billion during a recent Citi investor presentation.

Citi recorded an approximate $880 million translation loss in revenues in Argentina in the quarter, as a result of the recent devaluation of the Argentine peso. The decrease in revenues impacted Services, Markets and Banking. Citi also generated net interest income of approximately $250 million on its net investments in Argentina in the fourth quarter of 2023, which is not included above.

Citi recorded about $780 million in restructuring charges in the quarter, largely driven by severance, non-cash asset impairments and other related charges, as part of Citi's implementation of its organizational and management simplification initiatives as of year-end 2023.

The bank said the charges will be included in its earnings materials for the fourth quarter and full year of 2023, scheduled for release on January 12, 2024.