Citi cited "rapidly-evolving regulatory inquiries and investigations, including very recent communications with certain regulatory agencies related to previously-disclosed matters" as the cause of a $600 million increase in "legal accruals" that lowered net income to $2.8 billion from the previously-reported $3.4 billion. That drops earnings per share to 88 cents, from $1.07, and sent shares of Citi down almost 2% in after-hours trading.
A 10-Q for the third quarter filed shortly after Citi's statement details the litany of current litigation the bank is ensnared in, including an ongoing investigation into foreign exchange improprieties by global banks. Citi said its currency business is the target of civil and criminal investigations or inquiries from the Department of Justice, CFTC, U.K. financial conduct authority and Swiss Competition Commission.
Analysts at Keefe, Bruyette & Woods noted when the company initially reported Oct. 14 that Citi built legal reserves in the quarter, so whatever developments came since it reported results clearly upped the size of those reserves.
Questions and criticism have already surrounded Citi this year after the bank knocked down its fourth-quarter 2013 results in February, following the discovery of fraud in its Mexican unit Banamex.