(CTN News) – Citigroup warned investors that charges associated with the decline of the Argentine peso and the bank’s reorganization were higher than previously reported by its CFO.
According to the bank, its fourth-quarter results will reflect $880 million in currency conversion losses and $780 million in restructuring charges related to Fraser’s corporate simplification efforts.
At a Goldman Sachs conference held on Dec. 6, Mason told investors that the company would charge “couple hundred million dollars” apiece.
“Two categories are several hundred million dollars higher than they forecast just a month ago,” said veteran banking analyst Mike Mayo of Wells Fargo. If you have problems with investors, then you shouldn’t be doing this type of thing.”
Citigroup reports fourth-quarter and full-year 2023 earnings this week while restructuring efforts are underway to make the bank leaner and more profitable. Due to underperformance by Fraser’s predecessors, Citigroup has been dogged by high expenses and eroding credibility for more than two decades. Thus, Citigroup has the lowest value of the six largest U.S. banks.
As well as the two charges, Citigroup disclosed Wednesday that it needed to raise reserves by $1.3 billion due to its exposure to Argentina and Russia, and that it would incur a $1.7 billion expense for a special FDIC assessment related to the collapse of regional banks in 2023.
It is likely that Mayo will lose $1 per share in the fourth quarter due to the charges. Mayo recommends Citigroup stock, even though he knows it won’t be able to reach its targets. He claims it will double within three years despite Mayo’s skepticism.
In Wednesday’s after-hours trading, shares of the bank fell about 1%.
In response to Citigroup’s shifting guidance, a spokeswoman pointed to Mason’s late Wednesday remarks.
The items are meaningful for our 2023 results, but we remain on track to meet all of our medium-term targets (excluding FDIC and divestitures). As a result of the items we disclosed today, our strategy has not changed.”