Citigroup could incur $21.2bn of losses over nine quarters through mid-2015 and stay above minimum regulatory capital levels in a severe financial downturn.
Bloomberg News reports that the bank’s Tier 1 common capital ratio would fall to as low as 9.1 percent under a severely adverse scenario, above the 5 percent minimum set by U.S. regulators, the New York-based company said today in a presentation on its website. Citigroup’s projections come from a stress test mandated by the 2010 Dodd-Frank Act.
The biggest U.S. banks, including JPMorgan Chase & Co. and Bank of America Corp., must conduct so-called mid-cycle stress tests using their own scenarios and disclose a summary of the results.
Citigroup’s figures assume $43.1bn in pre-provision net revenue and an equal amount of loan losses in the nine quarters from the end of March 2013 through June 2015. Credit cards would account for $19.9bn of the losses, according to the presentation. Trading and counterparty losses, not included in the loan-loss estimate, would total $10bn.
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