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Citigroup reports earnings drop due to legal settlement

July 16, 2014



ENP Newswire - 16 July 2014

Release date- 15072014 - Citigroup agreed to pay USD 7bn in fines to resolve government claims, that it misled investors about the quality of mortgage-backed bonds sold before the 2008 financial crisis.

The accord includes a record USD 4bn civil penalty to the Justice Department, USD 500m to state attorneys general and the Federal Deposit Insurance, and about USD 2.5bn in various forms of consumer relief to be provided by the end of 2018, the bank said in a statement today.

'We have now resolved substantially all of our legacy RMBS and CDO litigation. This settlement is in the best interests of our shareholders, and allows us to move forward and to focus on the future, not the past,' Citigroup Chief Executive Officer Michael Corbat said in a statement. The bank took a USD 3.7bn charge in the second quarter to cover the cost of the settlement. Therefore, the New York-based bank reported a 96% drop in net income to USD 181m or 3 cents a share. Excluding special items, Citigroup showed an EPS of USD 1.24, clearly exceeding the median analysts' estimate of USD 1.05. Despite a higher-than-originally anticipated fine, we believe the bank will be able to overcome this setback. In a positive sense, the settlement clears some legacy issues and uncertainty for investors. Shares of Citigroup advanced nearly 4%, closing 3% higher.


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Source: ENP Newswire


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