The Securities and Exchange Commission (SEC) asked Citi to give the regulator “enhanced” disclosures relating to its exposure to Russia, the Financial Times and Reuters reported Friday.
Citi was not the only institution to receive such a request, in a May letter published online Friday. But evidence surfaced that the bank and SEC have corresponded on the matter. And Citi stands as the U.S. bank with the most substantial exposure to the country, which invaded Ukraine in late February.
The SEC’s Division of Corporation Finance sought revised first-quarter details from Citi regarding the impact of direct or indirect exposure to Russia, Belarus or Ukraine, including operations, investments, securities traded, sanctions against individuals, or uncertainty linked to exiting or continuing to operate in Russia. The agency also wanted the bank to detail any harm to assets or valuation; impact the bank has felt from supply chain disruption, heightened cybersecurity risks or volatility in the trading price of commodities.
In its response, Citi told the SEC none of its long-lived assets in Russia saw impairment in the first quarter, according to the Financial Times. However, the bank disclosed that its Russia-based consumer banking unit posted first-quarter revenue of $32 million, down 6% from a year earlier, according to Reuters. It said sanctions, a reduction in investment sales, and the bank's decision not to open new accounts hurt its consumer-banking operations.
Russia is one of 13 retail-banking markets from which Citi pledged in April 2021 that it would withdraw. At least three privately owned Russian companies have emerged as possible suitors, the Financial Times reported this month.
The bank in late February told investors it had $9.8 billion in exposure to Russia at the end of 2021. But it has since revised that figure downward. At Citi’s investor day, CFO Mark Mason told attendees the bank could lose “a little less than half of that” under a severe stress scenario. Mike Mayo, an analyst with Wells Fargo, in mid-March, estimated Citi could lose $1.5 billion from its Russia operations. The bank, in April, set aside $1.9 billion to counter its Russia exposure.
Citi told the SEC in May that it “revised” its financial statements to show certain investments separately — but that the change does not affect the net cash flow figure the bank reported for the quarter.
Citi is set to reveal its second-quarter earnings Friday.
