Today, Apple is the largest public company in the world, and the group’s iPhones can be found in stores all over the globe, but not long ago the company was a baby when the Apple IPO was filed in the 1970s. Not only is Apple the world’s most valuable company, but it’s also arguable that Read More
Citigroup decided to bite the bullet
Analysts say if the deal is finalized it means that Citigroup Inc (NYSE:C) decided that putting the issue to rest and moving on was worth a couple of billion extra dollars. Negotiations between Citigroup execs and regulators had broken down back in June when Citi was holding firm on a $3 billion settlement. The bank set aside that amount in reserves a few months earlier. According to analysts at Trefis, this means we will probably see Citi taking an additional pre-tax charge of $4 billion in the second quarter to reflect the $7 billion settlement.
$7 bil settlement will lead to loss in second quarter
The Trefis analysts also point out that the additional $4 billion charge is likely to push Citigroup Inc (NYSE:C) into the red for the second quarter. The firm announced back in May that second quarter trading revenues will be 20 to 25% below year-ago figures. They argue given the bank reported net income of $4.2 billion in Q2 2013 on revenues of $20.5 billion, and assuming other divisions performed as well as they did the prior year, then the decline in trading income would drop revenues to below $19 billion and net income to below $4 bil. This means the $4 billion additional settlement charge will completely wipe out profits for the quarter.
Of note, megabank JPMorgan Chase & Co. (NYSE:JPM) also posted a quarterly loss in the third quarter of 2013 after paying the feds $13 billion to settle its mortgage-related issues.