Citicorp Estimates Russia-Related Earnings Reduction.NEW YORK--(BUSINESS WIRE)--Sept. 1, 1998--Citibank today is sending the following message from John S. Reed For other persons of the same name, see John Reed. John Shepard Reed (born 1939) is the former Chairman of the New York Stock Exchange. He previously served as Chairman and CEO of Citicorp, Citibank, and post-merger, Citigroup. , Chairman, and Victor J. Menezes Menezes is a common surname in the Portuguese language. It may mean different things: People
To all Citibankers: With the current volatility in world financial markets, there is much speculation on the effect of these events on Citibank CITIBANK First National City Bank and our merger with Travelers Group. Consequently, we want to share a few thoughts with you, and through you, with our customers. We can confirm that plans for our merger are absolutely on track. We remain confident that the Federal Reserve Board will approve the merger and are hopeful that this will happen in the third quarter, though the Fed will determine the exact timing. Meanwhile, many financial institutions are being affected by the events in Russia, directly or indirectly, and the extreme market volatility, which we believe is temporary. Salomon Smith Barney Smith Barney is a division of Citigroup Global Capital Markets Inc., a global, full-service financial firm, that provides brokerage, investment banking and asset management services to corporations, governments and individuals around the world. announced yesterday that the volatility has had a negative effect on its trading results for July and August. They have closed their U.S. fixed-income arbitrage Fixed-Income Arbitrage An investment strategy that attempts to profit from arbitrage opportunities in interest rate securities. Notes: When using a fixed-income arbitrage strategy, the investor assumes opposing positions in the market to take advantage of small price unit and taken steps to substantially reduce the risk of their other arbitrage arbitrage: see foreign exchange. arbitrage Business operation involving the purchase of foreign currency, gold, financial securities, or commodities in one market and their almost simultaneous sale in another market, in order to profit from price activities. Citicorp, too, has been affected. At this point we estimate that total Russia-related losses, including trading, will reduce our after-tax earnings by approximately $200 million in the third quarter. Any continued weakness in the global securities markets will affect the contributions to earnings of venture capital and other portfolios as well. We will take steps to help assure a successful 1999. This means it's critically important that we pay close attention to our expenses, and continue to focus on our risk management processes. Overall, our core businesses continue to show good progress and, as we said in our second-quarter earnings release, we are positioned to enter the merger with good momentum. Cooperation between various Citicorp and Travelers units is encouraging and promises significant customer benefits once the merger is completed. We remain excited about the prospects, a sentiment that we believe is shared by Citibankers and our customers. John Reed Victor Menezes Victor J. Menezes (May 14, 1949 - ) is an engineer and banker, who acts as a top official in international financial organizations. He is originally from India and received his degree in electrical engineering from the Indian Institute of Technology, Bombay in 1970. CONTACT: Media contact: Richard J. Howe (212) 559-9425 or Investor contact: Sheri Ptashek (212) 559-4658 |
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