The Telegraph
Since 1st March, 1999
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Citi takes $ 1.5bn charge to cover losses

New York, Dec. 24: Citigroup, hoping to put behind it a host of problems that have plagued the company this year, said Monday that it would take a $ 1.5 billion after-tax charge in the fourth quarter to cover expected losses.

Part of the charge is intended to cover Citi’s share of a settlement reached by the securities industry last week regarding conflicts of interest involving research analysts. The charge also reflects some anticipated costs of private suits against Citigroup relating to the research scandal as well as expected payments from suits seeking to recover damages against Citigroup for its role in financing Enron and WorldCom, both of which have filed for bankruptcy protection.

Citigroup additionally set aside $ 200 million after taxes to cover potential losses on loans made by the bank, particularly to Argentina and to energy companies that have suffered in the wake of Enron’s failure.

Citigroup’s executives have been preoccupied throughout the year by numerous investigations relating to the company's investment banking business, which at various points threatened to damage the reputation of the bank’s chief executive, Sanford I. Weill. In recent weeks, Weill has made a flurry of announcements of new hires and changes in corporate governance in a bid to put the scandals behind Citigroup.

“We all at Citigroup are looking forward to the New Year,” Weill said in a conference call with analysts Monday morning. “The year 2002 has been a very difficult one for our company and our industry.”

Last September, Weill named Citigroup's one-time chief legal counsel, Charles O. Prince, to head its investment banking division, indicating that Prince’s priority was to resolve the regulatory inquiries quickly.

Citigroup’s shares fell 46 cents Monday to $ 37.68 a share, after rising $ 1.14 on Friday following the regulatory settlement. The company's stock is down nearly 20 per cent so far this year.

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