Jane Fraser CEO, Citi, speaks at the 2023 Milken Institute Global Conference on May 1, 2023 in Beverly Hills, California.
Mike Blake | Reuters
Citigroup warned investors late Wednesday fee Related to the collapse of the Argentine peso and the bank's restructuring comes more than what the company's CFO revealed a few weeks ago.
Its fourth-quarter results are scheduled to be released Friday morning, the bank said had an impact An $880 million foreign exchange loss from the peso and $780 million in restructuring charges were linked to CEO Jane Fraser's corporate simplification plan.
Those charges are significantly higher than the “hundreds of billions of dollars” that CFO Mark Mason told investors to expect at a Goldman Sachs conference on Dec. 6.
“They gave guidance a month ago, and now there's several hundred million dollars more for both categories,” Mike Mayo, a senior banking analyst at Wells Fargo, said in a telephone interview. “If your problem is investor credibility, you shouldn't be doing this kind of thing.”
Citigroup faces a pivotal moment this week amid restructuring efforts aimed at turning the bank into a leaner, more profitable company with fourth-quarter and full-year 2023 earnings. Over the past two decades, Citigroup has eroded credibility with high costs and failure to deliver on the goals of Fraser's predecessors. That makes Citigroup the least valued of the six big US banks.
Beyond the two charges, Citigroup disclosed on Wednesday that it will need to build up $1.3 billion in reserves due to exposure to Argentina and Russia, and $1.7 billion in special FDIC assessments related to regional bank failures by 2023.
The charges could result in a fourth-quarter loss of $1 per share, according to Mayo. Despite his own doubts that the bank will be able to meet its goals, he recommends Citigroup stock, saying it has failed so badly that it doubled in three years.
Shares of the bank were down about 1% in after-hours trading on Wednesday.
A Citigroup spokeswoman declined to comment on the bank's transition guidance, instead pointing to Mason's comments. Published Late Wednesday.
“While these items are meaningful to our 2023 results, we remain on track to meet all of our 2023 spending guidance (excluding FDIC and deductibles) and our medium-term goals,” Mason said. “The items we disclosed today do not change our strategy.”
