Citigroup reports $1.94b reserve build for Argentina and Russia

The news: Citigroup has reported a USD1.3 billion ($1.94 billion) reserve increase related to its exposure in Argentina and Russia.

The numbers: The bank said its reserve build was driven by "safety and soundness considerations" under US banking law, with cross-border and cross-currency exposures in Argentina of USD720 million - based on currency devaluation and geopolitical risk that may impact Argentina's ability to sustain external debt service - and in Russia of USD580 million, owing to “prolonged political and economic instability."

The context: High inflation, a volatile currency and capital controls in Argentina meant Citi had expected to incur losses there. Argentine President Javier Milei devalued the peso by over 50% during his first week in office in an attempt to restore investor confidence. Citi said it took a hit of around USD800 million in the fourth quarter due to the peso's recent fluctuations, and will take approximately USD780 million in restructuring charges in the period.

What they said: Citigroup's CFO Mark Mason said in a statement: "While we rarely provide information about the results of the quarter in advance of scheduled earnings announcement dates, we thought this was a prudent step in our commitment to building credibility and being transparent."