Financial Results

Citi Private Bank Revenues Rise, Results Of Probe Into Mexican Security Unit Revealed

Eliane Chavagnon, Editor - Family Wealth Report, 16 October 2014

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Private banking revenues rose 8 per cent year-on-year at [tag|Citigroup|]Citigroup[/tag] to $663 million for the third quarter of 2014, having also inched up 1 per cent from $656 million in this year's second quarter.

Private banking revenues rose 8 per cent year-on-year at Citigroup to $663 million for the third quarter of 2014, having also inched up 1 per cent from $656 million in this year's second quarter.

Across the group, Citi reported Q3 2014 net income of $3.4 billion, or $1.07 per diluted share, on revenues of $19.6 billion. This compares to net income of $3.2 billion, or $1.00 per diluted share, on revenues of $17.9 billion a year ago.

At quarter-end, Citigroup's Basel III Tier 1 Common ratio was 10.7 per cent, up from 10.5 per cent in the prior year period. This was largely driven by earnings and the use of deferred tax assets, the firm said.

Citicorp operating expenses rose 11 per cent from the prior year period to $11.5 billion, primarily reflecting higher legal and related expenses and repositioning charges, as well as an adjustment to incentive compensation expense in ICG, and higher regulatory and compliance costs - partially offset by continued efficiency savings.

Meanwhile, in a separate statement yesterday, Citi revealed the findings of an investigation - initiated in July - into the activities of a legacy Banamex unit in Mexico which provided personal security services.

The investigation included in-depth interviews, a review of electronic and paper files, and forensic analysis of computers and electronic media.

“The investigation uncovered illegal conduct, including fraud in the range of USD $15 million, the unauthorised providing of security services to outside parties, and the use of intercepted telecommunications,” Citi said. “The unit is being disbanded and security services will be provided by Citi’s global security function. We have also notified and are cooperating with law enforcement and regulators regarding this matter in the US and Mexico.”

“While the fraud is not financially material, the conduct of the individuals involved is appalling,” said Michael Corbat, Citi's chief executive. “Now that this investigation is complete, we intend to hold the individuals who conducted these activities accountable.”

In other big developments this quarter, Citi named Peter Charrington as global head of Citi Private Bank, having most recently been head of its North America business. He took the helm from Mark Mason, who was named as chief financial officer for Citi's Institutional Clients Group.

Tracey Warson was subsequently promoted as the new head of its North America business.

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