8-KOther EventsExhibits & Filings

CITIGROUP INC 8-K Report, Corporate Update (Jun 29, 2020)

Filed June 29, 2020For Securities:CC-PNC-PR

Summary

Citigroup Inc. (C) filed an 8-K on June 29, 2020, to disclose an important update regarding its capital requirements following the Federal Reserve's Stress Capital Buffer (SCB) communication. The Federal Reserve communicated an interim SCB requirement of 2.5% for Citi, which, when combined with a GSIB surcharge of 3%, results in a minimum regulatory requirement of 10% for both Standardized and Advanced Approaches concerning its Common Equity Tier 1 (CET1) ratio. As of the first quarter of 2020, Citi's CET1 ratio stood at 11.2% using the Advanced Approaches. This disclosure indicates that Citigroup remains well-capitalized to meet regulatory demands while continuing to support its customers and the economy. The company also stated its belief in its ability to proceed with planned capital actions, including common dividends of $0.51 per share in the third quarter and throughout the 2020 CCAR cycle (4Q 2020 - 3Q 2021), subject to board approval and prevailing market conditions. Investors should monitor these capital actions and the ongoing assessment of financial and macroeconomic conditions.

Key Highlights

  • 1Federal Reserve set Citi's interim Stress Capital Buffer (SCB) requirement at 2.5%.
  • 2Combined SCB and GSIB surcharge result in a minimum regulatory requirement of 10% for Citi's CET1 ratio.
  • 3Citi's CET1 ratio was 11.2% (Advanced Approaches) as of Q1 2020, exceeding the 10% minimum.
  • 4Citigroup believes it is well-positioned to continue supporting customers and the economy.
  • 5Company intends to proceed with planned capital actions, including common dividends, subject to approval and conditions.
  • 6Planned common dividend is $0.51 per share for Q3 2020 and across the 2020 CCAR cycle (4Q 2020 - 3Q 2021).

Frequently Asked Questions

The Federal Reserve's communication of an interim SCB requirement of 2.5% is significant because it, along with the GSIB surcharge, establishes Citi's minimum regulatory capital requirement. This ensures the bank maintains a robust capital cushion to withstand potential economic stresses.

Yes, as of Q1 2020, Citigroup's Common Equity Tier 1 (CET1) ratio was 11.2% under the Advanced Approaches. This is above the new minimum regulatory requirement of 10% (which includes the SCB and GSIB surcharge), indicating that the company is well-capitalized.

Citigroup plans to continue with its planned capital actions, which include paying a common dividend of $0.51 per share in the third quarter of 2020 and throughout the 2020 CCAR cycle (covering 4Q 2020 to 3Q 2021). These actions are subject to the approval of Citi's Board of Directors and prevailing financial and macroeconomic conditions.

GSIB stands for Global Systemically Important Bank. The GSIB surcharge is an additional capital requirement imposed by regulators on the largest, most interconnected banks to reduce the risks they pose to the financial system. For Citigroup, this surcharge is 3%.