Citigroup examining ways to return more capital to shareholders: CFO

Tue Jun 13, 2017 2:33pm EDT
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By Dan Freed

NEW YORK (Reuters) - Citigroup Inc (C.N: Quote) is looking at more efficient ways to meet regulatory requirements so it can return more capital to shareholders, Chief Financial Officer John Gerspach said at a conference on Tuesday.

Citi, the fourth-largest U.S. bank by assets, has $45 billion in excess capital that could be returned to shareholders eventually, Gerspach said. Roughly $29 billion of that is in deferred tax assets that cannot be distributed immediately, while another $15 billion to $16 billion is sitting idle not earning profits, he said.

"We absolutely have to ... begin to address that (excess capital) on which we're earning nothing," Gerspach said at an investor event hosted by Morgan Stanley.

However, like other big U.S. banks, Citigroup cannot return capital to shareholders through stock repurchases or dividends without permission from regulators.

The Federal Reserve oversees an annual stress test whose outcome determines how they can use capital. Those results are scheduled to be released in the coming weeks.

Another process known as "living wills," which requires banks to submit plans for dismantling themselves without taxpayer support in case of a crisis, also affects how they manage their businesses.

Citigroup is also focused on improving its resolution plan, Gerspach said. In the past, it has failed the stress test and its resolution plan has been rejected. Last year, however, it was the only one of eight large U.S. banks whose hypothetical wind-down plans were approved by both the U.S. Federal Reserve and Federal Deposit Insurance Corp.

To arrive at its capital return goals, Citigroup must improve in particular the performance of its consumer business, which is behind on its return targets but should start to see the benefit of prior investments in its credit card unit in the second half of 2017.   Continued...

A Citigroup office is seen at Canary Wharf  in London, Britain May 19, 2015.   REUTERS/Suzanne Plunkett