The $300 Trillion Time Bomb Is Ticking: Citigroup Says Derivatives Face Value Fell in 4th Quarter by $5 Trillion
Investmentwatchblog.com
January 17th, 2015
Citigroup Says Derivatives Face Value Fell in 4th Quarter
Citigroup Inc. (C), the third-biggest U.S. bank, said the notional value of its derivatives fell by about $5 trillion in the fourth quarter.
The bank ended the year with a total of about $60 trillion after working to tear up offsetting contracts, Chief Financial Officer
John Gerspach said today on a conference call with analysts after reporting fourth-quarter results. The firm had about $64.8 trillion in gross notionals at the end of September, according to the Office of the Comptroller of the Currency.
“We have been working to compress the trades and what you will see when we publish results at the end of the fourth quarter is a reduction in the reported amount of gross notionals,” Gerspach said. The bank will disclose more details of its derivatives business with its annual filing later this year and the OCC has yet to publish its report for 2014.
Citigroup has been expanding in derivatives, and its holding company now ranks behind JPMorgan Chase & Co. as the second-largest U.S. dealer despite regulatory efforts to rein in instruments that helped fuel the 2008 credit crunch. The U.S. lender has amassed the largest stockpile of interest-rate swaps, a type of derivative that can swing in value when central banks raise rates.
In the five years through June, Citigroup increased the notional value of its derivatives by 69 percent. Citibank N.A., the firm’s primary banking subsidiary, reported $70.3 trillion as of Sept. 30, outpacing the $65.3 trillion at JPMorgan’s bank, according to OCC data
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