Citigroup’s CFO Says Leverage Ratio in June Surpassed 5%
Citigroup Inc. (C), the third-biggest U.S. bank, said its ratio of capital to total assets averaged 4.9 percent in the second quarter and in June exceeded the 5 percent minimum that U.S. regulators proposed last week.
The bank disclosed the second-quarter Basel III supplementary leverage ratio in its second-quarter earnings report today. Chief Financial Officer John Gerspach said that figure rose toward the end of the period.
“That’s actually an average of the three months,” Gerspach told reporters on a conference call. “If you take a look just at the month of June, we actually were above 5 percent.”
The New York-based company hasn’t calculated a ratio for its deposit-taking unit, which must have capital equal to at least 6 percent of assets under the U.S. plan, according to Gerspach. He said the ratio was about 6 percent in March.
The proposed leverage ratios for the biggest U.S. banks go beyond the 3 percent global minimum requirement that the Basel Committee on Banking Supervision approved to help prevent another financial crisis. The changes would make lenders fund more of their assets with capital that can absorb losses instead of with borrowed money.
Citigroup almost collapsed in 2008 after losing billions of dollars on soured mortgage investments. Taxpayers rescued the firm with a $45 billion bailout, which the bank later repaid.
JPMorgan Chase & Co. (JPM), the biggest U.S. bank, said last week that both its holding company and deposit-taking subsidiary fall short of the proposed minimums. Jamie Dimon, CEO of the New York-based lender, criticized the plan for going further than international requirements.
“If one is 3 percent and one is 6 percent, that becomes just too big, and over time it can have huge competitive effects,” Dimon said on the conference call with analysts on July 12. “We always ran with higher capital and liquidity than most of our competitors.”