Citigroup is expected to incur a $3.8 billion impact on its fourth-quarter earnings due to a combination of charges and reserves, as outlined in a recent filing. The bank allocated $1.3 billion in reserves to mitigate risks outside the United States, particularly related to currency exposure in Argentina and Russia.
Additionally, Citigroup recorded $780 million in restructuring charges, encompassing severance pay for employees, associated with the bank’s comprehensive reorganization efforts. Another notable charge was about $1.7 billion to replenish a Federal Deposit Insurance Corp fund, which had been depleted following the collapses of Silicon Valley Bank and Signature Bank.
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Mark Mason, Citi’s finance chief, emphasized the bank’s commitment to transparency, stating that while it is unusual to disclose quarter results in advance, it was a prudent step to uphold credibility. He clarified that the disclosed items do not alter the bank’s strategy.
Specifically, the $720 million reserve for Argentina was designated to address risks tied to economic trends, currency devaluation, and geopolitical uncertainties affecting Argentina’s external debt service. Citi also reported approximately $880 million in lost revenues for Argentina in the fourth quarter due to the peso’s devaluation.
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In response to the prolonged political and economic instability in Russia, Citigroup added $580 million to its reserves.
To enhance transparency and facilitate comparisons, the bank filed historical financial reports in a new format spanning from March 2021 to September 2023, reflecting its reorganization into five main businesses. These reports will enable a comprehensive analysis alongside the fourth-quarter results to be reported on Friday.
