Citigroup Discloses Higher-than-Expected Charges, Impacting Q4 Results and CEO’s Restructuring Project

BEVERLY HILLS, California – Citigroup, one of the largest U.S. banks, has issued a warning to investors regarding higher charges than previously disclosed. The charges are connected to the decline of the Argentine peso and the ongoing reorganization of the bank. In particular, Citigroup mentioned $880 million in currency conversion losses and $780 million in restructuring charges. These numbers are far higher than what the company’s CFO, Mark Mason, had indicated just a few weeks ago. The bank’s fourth-quarter results, set to be released on Friday, have been significantly impacted by these charges.

This development comes after Mason had informed investors at a conference hosted by Goldman Sachs that the charges would be only in the “couple hundred million dollars” range. The revelation of significantly higher charges has raised concerns about the bank’s credibility with investors. Notably, banking analyst Mike Mayo of Wells Fargo expressed skepticism about the situation, stating that if credibility is a problem, such actions should be avoided.

Citigroup’s CEO, Jane Fraser, is facing a critical moment as she oversees the bank’s restructuring efforts. The goal of these efforts is to make the bank more profitable and streamlined after years of high expenses and eroded credibility. Currently, Citigroup is the lowest-valued among the six largest U.S. banks.

In addition to the currency conversion losses and restructuring charges, Citigroup also revealed that it needed to build reserves by $1.3 billion due to its exposure to Argentina and Russia. Furthermore, the bank expects to record a $1.7 billion expense related to a special FDIC assessment tied to regional bank failures in 2023.

Overall, these charges are expected to result in a fourth-quarter loss of $1 per share, according to Mike Mayo. Despite his skepticism, Mayo recommends Citigroup stock, believing that its current low value presents an opportunity for growth.

Citigroup shares dipped approximately 1% in after-hours trading following the announcement. The bank declined to comment specifically on the shifting guidance but pointed to remarks from CFO Mark Mason published on Wednesday. Mason stated that while the disclosed items are significant for the bank’s 2023 results, they do not alter the overall strategy and the bank remains on track to meet its expense guidance and other medium-term targets.

Citigroup’s fourth-quarter results, with the impact of these charges, will be closely watched by investors as they assess the progress of the bank’s restructuring efforts and its path towards increased profitability.