Market News

Citigroup (NYSE:C) Staring at $170M Charge over Russian Operations Wind Down

Story Highlights

Citigroup has hit a dead end on its bid to sell its commercial and consumer banking operations in Russia. The bank is on the cusp of incurring $170 million in costs as it winds down its Russian operations.

Citigroup (C) plans to shut down its Russian commercial and consumer banking operations after it failed to find buyers. The company expects to incur a $170 million charge as it shuts down the units. The winding down process will affect 2,300 employees and 15 branches.

Citigroup Russia Shuts Down

According to Titi Cole, the head of Citigroup’s franchise unit, winding down makes sense, given the complicated business environment. The company was in the process of overhauling the business as Russia went to war with Ukraine. With Russia being hit by crippling economic sanctions, finding potential suitors for the units has become increasingly difficult.

The winding down will begin this quarter. The operation will involve shutting down commercial banking operations for local Russian companies. The bank has also confirmed plans to sell some consumer loan portfolios as it continues to work with larger multinational clients in the country.

Citigroup’s core business revolves around serving multinational companies workwise. Unlike most U.S. banks, it remains the most exposed to Russia, going by a portfolio of some 500,000 clients, according to the WSJ.

With Russia being alienated from the rest of the world amid the U.S. sanctions, Citigroup has been looking to cut its exposure. The bank has already warned that it is at the risk of incurring $2 billion in losses due to its exposure to Russia.

What is the Target Price for Citigroup Stock?

While Citigroup stock is down about 13% year to date, Wall Street remains bullish about its long-term prospects. According to TipRanks’ analyst rating consensus, Citigroup is a Moderate Buy based on seven Buys, seven Holds, and one Sell. The average Citigroup price target is $60.90. Analysts’ sentiments are bullish, with almost 17% upside potential to Citigroup’s current stock price.

Also, TipRanks’ Stock Investors tool shows that investor sentiment is currently Positive on Citigroup’s stock. Over the past 30 days, 2.6% of the best-performing portfolios tracked by TipRanks increased their exposure in Citigroup stock.

Final Thoughts

A move to wind down operations in Russia seems like a step in the right direction for Citigroup, given the challenging working conditions in the country. In addition, the move should allow the bank to focus on other high-growth markets.

Read the full Disclosure.

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