Citigroup Takes Charges on Its Restructuring, Argentina, and Russia

“While we rarely provide information about the results of the quarter in advance of scheduled earnings announcement dates, we thought this was a prudent step in our commitment to building credibility and being transparent with our stakeholders, including our colleagues,” Citigroup CFO Mark Mason said in a statement posted to the bank’s website.

Citigroup said fourth quarter of 2023 pretax results were impacted by the addition of $1.3 billion to its reserves to protect against risks associated with its exposures to Argentina and Russia, according to the bank’s filing with the SEC. 

In the filing, Citi pointed to cross-border and cross-currency exposures in Argentina, based on economic trends, currency devaluation, and geopolitical risk that may impact the country’s ability to sustain external debt service. Of the $1.3 billion, Citi set aside $580 million for prolonged political and economic instability in Russia, according to the bank.

Argentina is in an acute economic crisis and has suffered under sky-high inflation; the government announced in December that it would devalue the Argentine peso. Russia, meanwhile, has been targeted with economic sanctions by the West since it invaded Ukraine.

Citi also provided fresh updates on previously disclosed items that it says will have an impact on its financials for the fourth quarter of 2023, including an approximately $880 million decrease in revenues in Argentina as a result of the devaluation of the peso. 

The bank is also taking a $780 million charge due to severance and other costs related to its restructuring efforts. Under CEO Jane Fraser, the company has recently reorganized itself and cut management and staff.

“While there are upfront costs to the organizational changes we’re implementing, there are clear benefits that will allow us to reduce our future expense base, as well as simplify our bank and strengthen our focus on clients,” Mason said in the statement.

Citi also said it is taking an approximate $1.7 billion charge to operating expenses in the quarter related to a previously disclosed special assessment by the FDIC. Citi previously estimated it to be approximately $1.65 billion, according to the filing. The assessment is also being levied on other banks as a result of the bank failures that took place in 2023, Mason said.

He said that while the items are meaningful for Citi’s 2023 results, they don’t change the bank’s strategy and Citi remains on track to reach its medium-term targets.

“As you’ve heard me say before, we are a bank for all seasons,” he said. “Our ability to digest these charges and take reserves against potential future challenges is a testament to the strength and stability of our firm and how we continue to weather all types of market environments.”

Write to Andrew Welsch at [email protected]