Seeking Alpha

Sell-side questions $10B penalty for Citi

The number seems proportionally well above the $17B amount wanted from Bank of America, notes JPMorgan's Vivek Juneja, and stands against the $4B offered by Citigroup (C -0.3%). It's possible, says Juneja, DOJ uncovered other significant issues or significantly higher loss rates on MBS issued by Citi as opposed to BofA.

In any case, its seems likely Citi will have to book a sizable charge to boost litigation reserves, thus cutting somewhat future capital returns. Near term, says Junjea, the litigation risk combined with weak trading and the slowdown in Mexico (Citi's largest EM) should keep the stock in the penalty box.

Previously: Report: DOJ wants more than $10B from Citi over mortgages

Reiterating its Outperform rating on Citi, Wells Fargo calls the $10B figure too high and says an agreement in the $8B range seem likely, which would cut EPS by $0.95.

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Comments (7)
  • deercreekvols
    , contributor
    Comments (7238) | Send Message
    Considering JPM has paid over $30B in fines, is Viveck Juneja the right guy to be asking about how much is too much when it comes to fines?
    16 Jun 2014, 02:17 PM Reply Like
  • Regarded Solutions
    , contributor
    Comments (20132) | Send Message
    Hey deer......that is SO right! Can I give more than one like on your comment????? This is incredible stuff to watch.
    16 Jun 2014, 02:23 PM Reply Like
  • deercreekvols
    , contributor
    Comments (7238) | Send Message


    Never seen anything like and wonder what things would be like if higher-ups, CEOs, CFOs, etc. had been sent to prison instead of opening the checkbook?


    I think 1 like is the limit, BTW...I appreciate the thought however.
    16 Jun 2014, 03:18 PM Reply Like
  • Seth Walters
    , contributor
    Comments (677) | Send Message
    This is silly. If there was wrongdoing, there need to be serious criminal charges against people. Levying fines on banks is window dressing and hurts no one but the shareholders.
    16 Jun 2014, 02:22 PM Reply Like
  • snoopy44
    , contributor
    Comments (1168) | Send Message
    Which is precisely why you should NOT be investing in ANY of the banks. None of us have any idea what they are carrying on their balance sheets or how much derivatives exposure they have. Stay away from all of them unless you like playing with fire.
    16 Jun 2014, 02:58 PM Reply Like
  • cjluthy
    , contributor
    Comments (16) | Send Message
    This silliness is what happens after "corporations are people, my friend" (Hint: THEY ARE *NOT*).
    16 Jun 2014, 03:13 PM Reply Like
  • CravenMoorehead
    , contributor
    Comments (265) | Send Message
    16 Jun 2014, 02:23 PM Reply Like
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