Citigroup Reports $31.7 Billion Gross Exposure in Five European Countries
Citigroup Inc. (C), the third-biggest U.S. bank, said it has $31.7 billion of gross funds at risk in Greece, Italy, Portugal, Spain and Ireland, including so-called hedges against potential default.
The firm, which last month estimated its net “exposure” was $22 billion as of June 30, said the larger figure includes about $2 billion in posted margin and $7 billion in hedges against funded commitments. To hedge, it bought credit protection from financial firms outside the five countries, the New York-based bank said today in a quarterly report.
Citigroup’s figures today were more detailed than estimates released July 15. The net amount of funds at risk, now estimated at $22.7 billion, includes $13.5 billion in so-called funded exposure. Of that, $6.4 billion stems from credit to financial institutions, $3.9 billion from corporations and $1.6 billion from sovereign debt, the bank said.
Citigroup shares have tumbled 20 percent since the beginning of July amid investor concern that the European debt crisis may engulf Italy and Spain, adding to a faltering U.S. economy and slowdowns in emerging markets such as Brazil, India and China. Chief Executive Officer Vikram Pandit and Chief Financial Officer John Gerspach had declined to tell analysts what the bank’s gross exposure to the five European nations was on a July 15 conference call.
“Citi currently believes that the risk of loss associated with these exposures is materially lower than the exposure levels,” the bank said. “Citigroup continues to actively monitor its exposures to these, as well as other, countries.”
JPMorgan
Funds at risk also include $9.2 billion in unfunded exposure, which can include letters of credit to borrowers who haven’t yet drawn on the money. The agreements are mainly with international companies based in the five nations and generally require that certain conditions are met before loans are made, according to the filing.
JPMorgan Chase & Co. (JPM), the second-biggest U.S. bank, today disclosed a net exposure to the five countries of about $14 billion, according to a quarterly report. The New York-based bank, led by CEO Jamie Dimon, didn’t disclose a gross figure in the filing. Joseph Evangelisti, a spokesman for the bank, declined to comment.
About 62 percent of JPMorgan’s net figure, or $8.7 billion, is exposure to corporate clients and 26 percent, or $3.6 billion, is tied to sovereign debt, mostly in Spain, according to the filing. About 12 percent, or $1.7 billion, is exposure to the banking sector in the five countries.
Bank of America Corp. (BAC), the biggest U.S. bank, said yesterday it had a $16.7 billion exposure to the five countries at the end of June, including loans and leases. This includes $15.2 billion of “non-sovereign” exposure, according to a quarterly report. The Charlotte, North Carolina-based lender purchased credit-default protection of $1.77 billion as a hedge against potential losses, according to the filing.
To contact the reporters on this story: Donal Griffin in New York at Dgriffin10@bloomberg.net;
To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net.
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