Summary: Citigroup released a report on its fourth-quarter Tuesday, citing a $2.7 billion legal bill it faces.
On Tuesday, Citigroup provided its investors with a glimpse of its fourth-quarter results, according to The New York Times.
The bank detailed an expected legal charge of $2.7 billion that is associated with multiple investigations of the bank.
For quite some time now, Citigroup has been involved in settlement talks with federal prosecutors and banking regulators regarding inquiries related to potential currency market manipulation and anti-money-laundering controls that are not strong enough.
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The legal fee charge in the fourth-quarter also includes an estimated expense of another investigation into Citigroup and the bank’s role it played in the manipulation of the benchmark Libor.
The legal charge might suggest that the bank is moving closer to settling these investigations since banks are required to put money aside for legal settlements the minute they have a feeling for the potential penalties.
Michael L. Corbat, the chief executive of the bank, announced the legal charges at a conference for the financial industry on Tuesday. Following the news, shares of Citigroup closed down one percent.
“We believe these legal charges should cover a significant portion of our outstanding legal matters based on current information,” Mr. Corbat said in a statement.
Investors were surprised in October when Citigroup dropped its third-quarter earnings in order to reflect increasing legal expenses as the bank moved close to a deal with regulators involving foreign currency manipulation.
Just last month, Citigroup and other banks paid $4.25 billion to settle an investigation into the foreign exchange business by British, Swiss and United States regulators.
The Justice Department is also investigating Citigroup into the issue of foreign exchange, which continues to increase the bank’s legal costs.
The bank’s legal troubles are also being affected by its Banamex USA unit. This unit focuses on banking services between Mexico and the United States. The unit is being investigated by federal prosecutors in Massachusetts for reported lapses in anti-money-laundering controls. The unit is also being investigated in Washington by banking regulators.
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On Tuesday, Citigroup also said that it will pay $800 million in repositioning costs to close branches and call centers all across the globe.
“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,” Corbat said.
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