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Citigroup will take a $2.7 billion charge in the fourth quarter

December 9, 2014, 6:41 PM UTC
A man walks past a Citibank branch in lower Manhattan, New York
A man walks past a Citibank branch in lower Manhattan, New York October 16, 2012. Citigroup Inc Chief Executive Vikram Pandit resigned abruptly on Tuesday, effective immediately, a shocking change at the top of the No. 3 U.S. bank just one day after a surprisingly strong quarterly earnings report. REUTERS/Carlo Allegri (UNITED STATES - Tags: BUSINESS) - RTR397EH
Photograph by Carlo Allegri — Reuters

Citigroup Inc will record $2.7 billion in additional legal costs and another $800 million of repositioning charges in the fourth quarter, Chief Executive Officer Mike Corbat said on Tuesday.

Corbat, speaking at an investor conference in New York, said the legal costs stemmed from investigations into foreign exchange trading, setting of LIBOR interest rates and compliance with rules against money laundering.

The repositioning charges related to shrinking its operations by moving out of buildings and reducing payrolls.

The added expenses will leave the company “marginally profitable” in the fourth quarter, he said.

Corbat’ announcement was the second time in six weeks the company has suddenly disclosed an increase in legal expenses. On Oct. 30, it lowered its previously announced third-quarter results because of an additional $600 million in legal costs. The change took Citigroup’s third-quarter profit down to $2.84 billion.

Corbat said on Tuesday the company believed the latest expenses will go a long way toward covering current legal liabilities.

Citigroup (C) shares dropped as Corbat announced the latest costs.