Citigroup, concerns from Argentina and Russia
Citigroup Inc., the large American multinational of investment banks and financial services companies based in New York closes 2023 with many fears related to its exhibitions in Argentina and Russia. And those concerns are reflected in its fourth-quarter results. In the documents presented to Securities and Exchange Commission (the SEC) of the United States there are in fact cancellations and provisions for approximately 3.7 billion dollars. Among these, 1.6 billion dollars are related to Argentina.
A risk that the Bank defines as “cross-border and multi-currency exposures based on current economic trends, on currency devaluation It is on geopolitical risk. A set of causes that could impact Argentina's ability to sustain the service of foreign debt”.
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Technically, the bank communicated that the 1.3 billion writedowns are related to “transfer risk associated with exposures outside the United States, a risk driven by safety and soundness considerations under US banking legislation”. Of these figures, 720 million dollars are related to Argentina and 580 million to Russia.
Citigroup, losses due to the devaluation of the Argentine peso
Furthermore, in the document presented it is reported that precisely in Argentina Citigroup had to record revenue losses of approximately $880 million due to the devaluation of the Argentine peso. A 50% devaluation desired by the new president, Javier Milei in line with his economic program of “tears and blood”. And, always in the country, Quote it also had net interest payments of approximately $250 million in the fourth quarter of the year (not included in that figure).
In its latest quarterly report (third quarter) the American banking institution had valued its investments in the Central American country at around 1.9 billion dollars, foreseeing substantial losses if the devaluation of the currency began. Citigroup already in 2016 it had shown concern about the stability of the Argentine country and had sold its retail banking activities to try to rationalize and reduce costs.
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And in 2018, Citigroup Inc. changed accounting in Argentina to the US dollar after deeming the country's economy “highly inflationary.” In addition to the headaches from Russia and Argentina, the year saw other problems for the bank which, according to the top management, will all be “taken into account” this year in order to rebalance the accounts.
Citigroup, 2023 to rationalize its accounts
Quote recorded a charge of approximately $1.7 billion to operating expenses in the quarter related to the special assessment of Federal Deposit Insurance Corporation (FDIC) under the Bank Rescue Act. Added to those charges was another $780 million in the quarter from layoffs, asset write-downs and more.
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The words of the CEO Jane Fraser clarify that “all of this will be reflected in Citi's results for the fourth quarter and full year 2023 (released on January 12, 2024). Although we rarely give information on quarterly results ahead of the expected dates we thought it was a sign to be even more transparent and credible”.
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