Citigroup to post $2.7 billion in added legal costs in fourth quarter: CEO
(Reuters) - Citigroup Inc will record $2.7 billion in litigation expenses and another $800 million in repositioning charges, leaving the third-largest U.S. bank "marginally profitable" in the fourth quarter, its chief executive officer said on Tuesday.
Mike Corbat's announcement at a New York investor conference was the second time in six weeks the bank has had to tack on a massive legal charge.
The costs stemmed from government investigations into possible manipulation of foreign exchange markets, setting of LIBOR interest rates and lax compliance of money laundering rules. Past legal charges have foreshadowed settlements of cases.
Before the announcement, analysts had expected Citigroup would make about $3.4 billion in the fourth quarter, instead of a small profit.
While dealing with legal problems, Corbat has been trying to meet his profit and efficiency targets for next year. He was appointed CEO in 2012.
He is also pressing for Federal Reserve approval next year to return more capital to shareholders through higher dividends and stock buybacks. The Fed rejected Citi's last request after examining how the company would manage risk to its capital under stress.
Since Corbat became CEO, Citigroup has reduced its payroll by 20,000 jobs. It employed 243,000 at the end of September.
It has also cut its real estate by 10 million square feet, or 15 percent, he said. The company has been closing bank branches, consolidating back-office support centers and getting out of consumer businesses that are too small to be efficient in some countries.
With the $2.7 billion in legal charges, the company has "largely" covered its expected liabilities, Corbat said. Continued...