Citigroup Restates Earnings After Writing Down Revlon Loan
(Bloomberg) -- Citigroup Inc. restated fourth-quarter results after writing down a portion of a loan to Revlon Inc. it now owns after losing a court battle.
The bank said in a regulatory filing on Friday that it now has rights as a creditor to the troubled cosmetics giant after it lost a court battle over a payment mistakenly sent to a band of lenders to Revlon in August. It's since written down a portion of the loan.
Separately in the filing, the bank said losses “related to certain legal matters” forced it to boost operating expenses in its institutional clients group by $390 million in the fourth quarter. That meant Citigroup's net income for the final three months of the year came to $4.3 billion, compared with the $4.6 billion it reported in January.
Citigroup was trying to send a periodic interest payment to a group of Revlon's lenders in August when instead it transferred $900 million, an amount equal to the full principal of the loan plus interest.
“After a careful assessment of the incident, Citi immediately put in additional controls to prevent similar loan disbursement errors in the future, while also embarking on a major upgrade of the loan infrastructure and controls,” the bank said in Friday's filing.
While some lenders opted to return roughly $389.8 million, the bank sued 10 fund managers to recoup the remaining funds.
Read More: Citi May Get Stuck With Huge Chunk of Distressed Revlon Debt
After a trial that was closely watched across Wall Street in December, Citigroup unexpectedly lost the case earlier this month. The bank continues to believe it is entitled to the funds and has said it will appeal.
Separately on Friday, the firm said regulatory agencies in the Asia Pacific region are probing the firm's equity sales trading desks.
The probes are tied to facilitation trades, or transactions in which the bank “trades fully or partially as principal,” Citigroup said in the filing. The firm said it is cooperating with the investigation.
©2021 Bloomberg L.P.
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