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July 14, 2014 at 12:34 PM
Citigroup Inc., the third-biggest U.S. bank, said second-quarter profit tumbled 96% on $3.7 billion in costs tied to a mortgage-bond settlement with U.S. authorities.
Net income fell to $181 million, or 3 cents a share, from $4.18 billion, or $1.34, a year earlier, the New York-based company said today in a statement. Excluding special items, profit was $1.24 a share. The average estimate of 25 analysts surveyed by Bloomberg was $1.05.
Citigroup and U.S. authorities announced a $7 billion agreement earlier today to resolve the probe. The deal, signed over the weekend, requires the company to pay $4 billion to the Justice Department, and a total of $500 million to state attorneys general and the Federal Deposit Insurance Corp. A further $2.5 billion will go toward consumer relief, according to the company.
“Despite the significant impact of today’s settlement on our net income, our capital position strengthened,” Chief Executive Officer Michael Corbat said in the statement.
Corbat, 54, follows his counterparts at bigger banks in grappling with regulators over allegations of misrepresenting the quality of mortgage-backed bonds sold to investors. JPMorgan Chase & Co., the largest U.S. lender, agreed in November to pay $13 billion to resolve similar federal and state probes. The government has sought about $17 billion from No. 2 Bank of America, a person familiar with the talks has said.
Settlement Tally
