Citigroup takes $1.5 bn charge

NEW YORK, Dec. 24 (UPI) -- Financial services group Citigroup will take an after-tax charge of $1.5 billion against earning for its fourth financial quarter stemming from its recent settlement with Wall Street regulators along with the future expectation of litigation and other possible settlements.

The write off covers the $400 million that Citigroup agreed to pay last week in a landmark settlement over alleged conflicts of interest between the equity research and investment banking sides of the company.

The bank was among 10 Wall Street financial companies that settled with an alliance of regulators ranging from New York State to the U.S. Securities and Exchange Commission on charges of having deceived investors with incorrect or biased research.

"The settlement-in-principle, once finalized, will bring to a close a difficult chapter in our history. This is an important event for investors, the financial services industry and Citigroup," said Sanford I. Weill, Citigroup's chairman and chief executive officer in a statement. "During this period, we cooperated fully with inquiries by regulators and the New York Attorney General and, at the same time, led the industry in implementing reform."

He said the charge also covered regulatory inquiries and private litigation related to the collapse of Enron Corp., including $200 million, or 4 cents a share, to increase its credit reserves in order to cover credit losses.

Even with the massive write off, Wall Street analysts say they expect Citigroup to earn 75 cents a share in the fourth quarter, according to consensus estimates from Thomson First Call.

Citigroup came under scrutiny for the activities of its Salomon Smith Barney investment banking division.