Citigroup's Shares Drop After it Sets Aside $600m More to Cover Legal Costs
Citigroup's shares drop after it sets aside $600m more to cover legal costs.Reuters

Shares in Citigroup fell in pre-market trading after the banking giant said it had set aside an additional $600m to cover litigation expenses in the third-quarter, owing to "rapidly evolving regulatory inquiries."

Citi's shares were trading 1.41% lower at 0501 EDT in New York.

Citigroup, on 30 October, also said that its estimate of possible legal costs in excess of its litigation reserves was about $5bn (£3.1bn, €3.9bn), the same as it estimated for the end of the preceding-quarter and for year-end.

The additional expenses burden forced Citi to revise down its third-quarter net income to $2.84bn from the $3.44bn it had posted on 14 October.

Citigroup faces additional potential settlements. For instance, US authorities are investigating possible money laundering through Citigroup's Banamex USA unit. The Mexican arm of the Banamex business has been plagued by problems including fraudulent loans and rogue trading.

Meanwhile, Citi is one of six major banks that are expected to settle with the UK's Financial Conduct Authority this year, over allegations that it manipulated the foreign exchange markets.

The six banks are aiming to settle for a total of around £1.5bn, Reuters reported. Barclays, among the six, said on 30 October that it had set aside £500m for the third-quarter to cover possible fines.

Earlier in the month, Citi announced its intention to exit the consumer sector in 11 different markets.

The US banking firm, which is looking to simplify operations, said it will sell off its consumer banking in Costa Rica, El Salvador, Guatemala, Nicaragua, Panama, Peru, Japan, Guam, Czech Republic, Egypt and Hungary.