Citigroup Pares Russian Operations, Could Lose $5B — Report

New York-based Citigroup, Inc. (NYSE: C) has pared down the operations of its Russian consumer business after the country invaded Ukraine on February 24, a report published by Reuters said citing a post on the company’s website.

Edward Skyler, the Executive Vice-President for Global Affairs at Citigroup, said, “With the Russian economy in the process of being disconnected from the global financial system as a consequence of the invasion, we continue to assess our operations in the country.”

The post also said that Citigroup will continue to divest the business while providing support to its corporate clients in Russia. However, analysts believe the company will have to wind down the business, as there will be no buyers due to the sanctions imposed by the U.S. on Russia.

The investment banking giant has an exposure of around $10 billion in the transcontinental nation and could lose $5 billion in a “severe stress scenario,” the company’s CFO said.

C stock closed almost 2% higher on Wednesday. It gained another 0.2% in the extended trading session to end the day at $56.05.

Price Target

Following Citi’s Investor Day last week, Credit Suisse (NYSE: CS) analyst Susan Roth Katzke maintained a Buy rating on the stock but lowered the price target to $66 from $72 (18% upside potential).

Further, Ken Usdin of Jefferies (NYSE: JEF) downgraded the rating on Citi to Hold from Buy and cut the price target from $79 to $60 (7.2% upside potential).

In a research note, Usdin said, “Citi’s new targets for a return on average tangible common shareholders’ equity (ROTCE) are loftier (11%-12%) and farther away (2024-2026) than our expectations.”

Based on 10 Buys and 9 Holds, Citigroup has a Moderate Buy consensus rating. The average C price target of $74.54 implies 33.2% upside potential from current levels. Shares have lost almost 22% over the past year.

Hedge Fund Trading Activity

TipRanks’ Hedge Fund Trading Activity tool shows that confidence in Citi is currently Very Positive, as the cumulative change in holdings across all 32 hedge funds that were active in the last quarter was an increase of 10.6 million shares.

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