Citigroup to take $300 million 'repositioning charge' in fourth quarter
By Dan Freed
NEW YORK (Reuters) - Citigroup Inc (C.N: Quote) will take a $300 million "repositioning charge" in the fourth quarter to "resize infrastructure and capacity" throughout its businesses, Chief Financial Officer John Gerspach said on Wednesday.
Citi will also add $300 million to $400 million in loan reserves from the third quarter for energy loans, based on the expectation that oil prices will remain low, Gerspach told the Goldman Sachs U.S. financial services conference.
Depressed oil prices have put several U.S. banks under pressure because of their exposure to loans to oil companies.
Citi is due to report fourth-quarter earnings on Jan. 15.
"From an expense point of view, we will be taking a repositioning charge of say about $300 million in Citicorp in the fourth quarter," Gerspach said. "That is as we continue to resize our infrastructure and our capacity to deal with a continuing low-revenue environment."
Gerspach declined to comment when asked about investment banking bonuses, saying Citi would "pay competitively".
The last time Citi took a repositioning charge as large as this was in the fourth quarter of 2014, said Barclays analyst Jason Goldberg. At that time, the charge was $655 million.