Citigroup Has Most Revenue at Risk in FX, Bernstein Says

Citigroup Inc. (C) has the most revenue at risk from trading currencies as regulators investigate allegations of rigging in the $5.3-trillion-a-day foreign-exchange markets, according to Sanford C. Bernstein & Co.

Citigroup gets roughly 4 percent to 5 percent of revenue from currency trading, according to a report today from John McDonald, an analyst at Sanford Bernstein. Based on Citigroup’s $76.4 billion in total revenue last year, McDonald’s estimate would amount to as much as $3.8 billion.

“FX is largest as a percentage of total revenue at Citi” among universal banks, McDonald wrote, adding that the bank leads competitors “due in part to its large higher-margin local-markets business.”

McDonald’s currency estimate assumes about half the bank’s local-markets revenue comes from foreign-exchange trading. In a September 2012 presentation, Citigroup said revenue from interest-rate and currency trading in local markets totaled $4.5 billion for the 12 months ending in June of that year. The firm hasn’t provided an updated figure.

Mark Costiglio, a bank spokesman, declined to comment on the Bernstein report.

Authorities on three continents are investigating whether traders at some of the world’s largest banks sought to manipulate benchmark currency rates. The probes, resulting lawsuits and eventual settlements are likely to be among the last of the big legal expenses for banks, though it’s too early to estimate the cost, McDonald wrote.

Photographer: Simon Dawson/Bloomberg

Citigroup Chief Executive Officer Michael Corbat. Close

Citigroup Chief Executive Officer Michael Corbat.

Photographer: Simon Dawson/Bloomberg

Citigroup Chief Executive Officer Michael Corbat.

‘Big Ticket’

“FX could be one of the remaining ‘big ticket’ legal items for universal banks to resolve before a fading of litigation headwinds can become more realistic,” he wrote.

Citigroup, led by Chief Executive Officer Michael Corbat, 54, is the second-largest global currency dealer, trailing Deutsche Bank AG, according to a May 2013 survey by Euromoney magazine. The firm’s fixed income, currencies and commodities business brought in about $13.3 billion of revenue last year, or 17 percent of the total.

Among Citigroup’s so-called universal bank competitors, JPMorgan Chase & Co. ranks second with the most revenue at risk, drawing about 2 percent from foreign-exchange trading, while Bank of America Corp. comes in third, with about 1 percent, McDonald wrote.

To contact the reporter on this story: Dakin Campbell in New York at

To contact the editors responsible for this story: Peter Eichenbaum at Steve Dickson, Steven Crabill

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