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Citigroup Has Most Revenue at Risk in FX, Bernstein Says

Michael Corbat
Citigroup Chief Executive Officer Michael Corbat. Photographer: Simon Dawson/Bloomberg

May 9 (Bloomberg) -- Citigroup has the most revenue at risk from trading currencies as regulators investigate allegations of rigging in the $5.3-t-a-day foreign-exchange markets, according to Sanford C. Bernstein.

* Citigroup gets roughly 4% to 5% of revenue from currency

trading, according to a report from John McDonald, an

analyst at Sanford Bernstein; based on Citigroup’s $76.4b in

total revenue last yr, McDonald’s estimate would amount to

as much as $3.8b * “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 $4.5b for the 12 months ending in June of that yr;

the firm hasn’t provided an updated figure * Mark Costiglio, a bank spokesman, declined to comment on the

Bernstein report * “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,” McDonald wrote * Citigroup, led by CEO Michael Corbat, 54, is the second- largest global currency dealer, trailing Deutsche Bank,

according to a May 2013 survey by Euromoney magazine; the

firm’s fixed income, currencies and commodities business

brought in about $13.3b of revenue last yr, or 17% of the

total * Among Citigroup’s so-called universal bank competitors,

JPMorgan Chase ranks second with the most revenue at risk,

drawing about 2% from foreign-exchange trading, while Bank

of America comes in third, with about 1%, McDonald wrote

For Related News and Information: Trader Exodus Mounts as Forex Inquiries Put Focus on Costs NSN N4UYIX6KLVR6<GO> London Afternoon Currency Spikes Subside as Regulators Probe NSN N02GSW6JIJV8 <GO> Traders Said to Rig Currency Rates to Profit From Clients NSN MOAKYS6TTDTT <GO>

To contact the reporter on this story: Dakin Campbell in New York at +1-212-617-6743 or To contact the editors responsible for this story: Peter Eichenbaum at +1-212-617-5722 or Steve Dickson, Steven Crabill

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