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Citigroup set aside $1.3 billion to cover risks related to Argentina and Russia

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Citigroup Inc. on Wednesday said it set aside $1.3 billion in the fourth quarter to account for risks in Argentina and Russia, citing shocks to both nations’ economies, and said it booked other charges related to its own organizational overhaul and payments stemming from last year’s bank failures.

The disclosure from the bank, in an SEC filing, was made as it prepares to report fourth-quarter results on Friday, and as Argentina undergoes harsh austerity measures and Russia deals with the fallout from its war in Ukraine.

Chief Financial Officer Mark Mason, in a blog post discussing the disclosure, said the bank remains “on track” to hit its 2023 expense forecasts.

“The items we disclosed today do not change our strategy,” he said.  

Still, Citigroup shares
C,
-0.86%

fell 1.6% after hours on Wednesday.

Citigroup said the $1.3 billion in reserves, which affected pretax fourth-quarter results, was “driven by safety and soundness considerations under U.S. banking law.”

It cited “cross-border and cross-currency exposures” in Argentina, and concerns over the nation’s ability to handle its debt. The bank also cited “prolonged political and economic instability” in Russia.

Argentina’s government, under its new, right-wing populist president, Javier Milei, has announced plans to slash the value of its currency by 50% and cut a variety of services, and permit the privatization of some state-run businesses, as the nation deals with rampant inflation and unemployment. The moves have been met with protests.

Citigroup said it was hit with a roughly $880 million loss in revenue in Argentina, following the devaluation of the peso there.

Citigroup, in the filing, also said it recorded a $1.7 billion charge to its operating expenses in the quarter related to a special assessment from the Federal Deposit Insurance Corp., under which the FDIC would collect money to cover for uninsured deposits lost after the collapse of Silicon Valley Bank and others last year.

Citigroup also said it booked around $780 million in restructuring charges in the fourth quarter, driven by things like severance.

Under Chief Executive Jane Fraser, Citigroup has cut jobs and shed some operations abroad. Fraser has tried to double down on the bank’s core businesses.

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