Citigroup profit to take $3.8 billion hit on charges, reserves

Citigroup booked about $3.8 billion in combined charges and reserves that will erode its fourth-quarter earnings set to be reported on Friday, according to a filing.

The bank stockpiled $1.3 billion in reserves to cover risks outside the U.S., particularly currency exposure in Argentina and Russia, it said on Wednesday.

It booked $780 million in restructuring charges, including severance pay for employees, related to the lender's sweeping reorganization.

The company recorded a charge of about $1.7 billion to replenish a Federal Deposit Insurance Corp fund that was drained after the collapses of Silicon Valley Bank and Signature Bank.

"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," Mark Mason, Citi's finance chief, wrote in a separate statement. "The items we disclosed today do not change our strategy."

The $720 million reserve for Argentina was set aside to cover risks "based on prevailing economic trends, currency devaluation and geopolitical risk that may impact Argentina’s ability to sustain external debt service," Citi said in the filing.

It also booked about $880 million in lost revenues for Argentina in the fourth quarter after the devaluation of the peso.

Argentina's government under new President Javier Milei has unveiled a "shock therapy" economic plan, a radical blueprint to stabilize an economy that faces its worst crisis in decades.

Citi added $580 million to its reserves for "the prolonged political and economic instability" in Russia.

The bank also filed historical financial reports in a new format spanning March 2021 to September 2023 to reflect its reorganization into five main businesses. The reports will allow comparisons with fourth-quarter results on Friday.