Citigroup Warns of Russia Exposure
(3 March 2022 - Global) Citigroup risks losing roughly $4bn because of its exposure to Russia, the bank said on Wednesday, as the war in Ukraine complicates its plan to pull out of the country.
Earlier this week, Citi disclosed it had $9.8bn of total exposures to the country at the end of last year, making it more vulnerable to sanctions against Moscow than other large US banks.
The exposures include its Russian retail bank, which the Bank put up for sale last year, and deposits with Russia’s central bank, which had sanctions imposed on it by western powers on Sunday.
In a “severe stress scenario” the bank could lose “a little less than half of that exposure,” chief financial officer Mark Mason told analysts at the bank’s investor day on Wednesday.
But Mason said the final loss could be significantly lower depending on how the situation in Russia unfolds. “We’ve been managing . . . very proactively to bring that number down,” he said.
Jane Fraser, chief executive, announced plans to sell most of the bank’s international consumer operations in April last year to focus on more profitable business lines.
Since then, Citi has reached deals to exit roughly half of those markets, a process that has been marred by more than $2bn in writedowns. It has not completed a sale of its Russian retail bank, however.
Citi addressed its potential losses from its exposure to Russia on Wednesday as it set a new profitability target. The target indicated the US bank will continue to lag behind Wall Street rivals in the coming years as Fraser pursues a costly restructuring program.
When the restructuring was complete, Citi would focus on “five core interconnected businesses”, Fraser said. Those businesses include treasury and trade services, global wealth management, corporate and commercial banking, markets and US personal banking.
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