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Citi (C) to Incur $190M Charges on Exit From Russia Operations
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Citigroup Inc. (C - Free Report) expects to incur costs of $190 million in connection with plans to wind down consumer and institutional banking business in Russia. The company noted in its 10K filing that these charges will be incurred through 2024.
Of the total amount, around $110 million will be incurred from winding down its consumer business in Russia, whereas another $80 million will be incurred in its Legacy franchise from getting out of its investment and corporate banking operations there.
While the bank announced plans in April 2021 to sell its global consumer business in Russia and other 12 markets, in March 2022, it broadened the scope of the planned exit to sell commercial banking operations as well.
However, sanctions from Western nations due to Russia’s invasion of Ukraine made a sale difficult. In August 2022, the bank decided to just wind down the operation. The company had then estimated to incur $170 million in charges over the period of winding down. These were mainly related to “restructuring, vendor termination fees and other related charges.”
As of 2022 end, the bank had $7.5 billion in total exposure to the country, down from $9.8 billion at the end of 2021, while net investment at 2022 end stood at $1.2 billion.
Our Take
For a long time, Citigroup has been emphasizing growth in core businesses through streamlining operations internationally. The bank has said that it would wind down its UK retail banking business, and expand personal banking and wealth management businesses in the region.
In January 2022, the bank revealed plans to exit the consumer, small business and middle-market banking operations in Mexico. This is in addition to its major strategic action announced in April 2021 to exit the consumer banking business in 13 markets across Asia and EMEA, including Australia, Bahrain, China, India, Indonesia and Korea.
Since then, Citigroup has signed numerous deals to sell consumer businesses in Indonesia, Taiwan, Vietnam and India. It has also completed the sale of the Bahrain, Malaysia, Thailand, Australia and Philippines consumer businesses.
Such exits will free up capital and help the company pursue investments in wealth management operations in Singapore, Hong Kong, the UAE and London to stoke growth. These efforts will likely help augment the company’s profitability and efficiency over the long term.
Over the past year, shares of Citigroup have lost 13.9% compared with a decline of 8.7% recorded by the industry.
Image Source: Zacks Investment Research
Currently, Citigroup carries a Zacks Rank #3 (Hold).
Stocks Worth a Look
A couple of better-ranked stocks from the finance space are The Bank of New York Mellon (BK - Free Report) and State Street (STT - Free Report) .
The Zacks Consensus Estimate for BNY Mellon’s current-year earnings has moved 1.7% higher over the past 30 days. Its shares have gained 21.7% in the past six months. Currently, BK sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
State Street currently carries a Zacks Rank #2 (Buy). Its earnings estimates for 2023 have been revised 2.1% upward over the past 30 days. In the past six months, STT’s shares have rallied 29.2%.
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Citi (C) to Incur $190M Charges on Exit From Russia Operations
Citigroup Inc. (C - Free Report) expects to incur costs of $190 million in connection with plans to wind down consumer and institutional banking business in Russia. The company noted in its 10K filing that these charges will be incurred through 2024.
Of the total amount, around $110 million will be incurred from winding down its consumer business in Russia, whereas another $80 million will be incurred in its Legacy franchise from getting out of its investment and corporate banking operations there.
While the bank announced plans in April 2021 to sell its global consumer business in Russia and other 12 markets, in March 2022, it broadened the scope of the planned exit to sell commercial banking operations as well.
However, sanctions from Western nations due to Russia’s invasion of Ukraine made a sale difficult. In August 2022, the bank decided to just wind down the operation. The company had then estimated to incur $170 million in charges over the period of winding down. These were mainly related to “restructuring, vendor termination fees and other related charges.”
As of 2022 end, the bank had $7.5 billion in total exposure to the country, down from $9.8 billion at the end of 2021, while net investment at 2022 end stood at $1.2 billion.
Our Take
For a long time, Citigroup has been emphasizing growth in core businesses through streamlining operations internationally. The bank has said that it would wind down its UK retail banking business, and expand personal banking and wealth management businesses in the region.
In January 2022, the bank revealed plans to exit the consumer, small business and middle-market banking operations in Mexico. This is in addition to its major strategic action announced in April 2021 to exit the consumer banking business in 13 markets across Asia and EMEA, including Australia, Bahrain, China, India, Indonesia and Korea.
Since then, Citigroup has signed numerous deals to sell consumer businesses in Indonesia, Taiwan, Vietnam and India. It has also completed the sale of the Bahrain, Malaysia, Thailand, Australia and Philippines consumer businesses.
Such exits will free up capital and help the company pursue investments in wealth management operations in Singapore, Hong Kong, the UAE and London to stoke growth. These efforts will likely help augment the company’s profitability and efficiency over the long term.
Over the past year, shares of Citigroup have lost 13.9% compared with a decline of 8.7% recorded by the industry.
Image Source: Zacks Investment Research
Currently, Citigroup carries a Zacks Rank #3 (Hold).
Stocks Worth a Look
A couple of better-ranked stocks from the finance space are The Bank of New York Mellon (BK - Free Report) and State Street (STT - Free Report) .
The Zacks Consensus Estimate for BNY Mellon’s current-year earnings has moved 1.7% higher over the past 30 days. Its shares have gained 21.7% in the past six months. Currently, BK sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
State Street currently carries a Zacks Rank #2 (Buy). Its earnings estimates for 2023 have been revised 2.1% upward over the past 30 days. In the past six months, STT’s shares have rallied 29.2%.