JPMorgan Chase (NYSE:JPM) has been the target of regulators for quite a while now. However, with JPMorgan about to settle these probes, regulators might be setting their sights on Citigroup (NYSE:C), says Bloomberg.
Charles Peabody, an analyst at Portales Partners, has pointed out that Citigroup has$5 billion in potential legal costs not covered by reserves halfway through the year. This figure is only second higher to JPMorgan. According to Peabody, this may indicate that this bank is expecting to be the next target.
By assets, Citigroup is ranked at number three in the U.S. while JPMorgan is the largest bank in the country in terms of assets. Although Citigroup has not been named yet, U.S. Attorney General Eric Holder said that announcements concerning other banks would be forthcoming. Thus, it might just be a matter of time.
According to Bloomberg, litigation costs for the company have risen to $1.44 billion in the first half of 2013. If this continues, it could be the most expensive year for litigation costs since the financial crisis.
A spokesman for Citigroup, Mark Costiglio, declined to speak on the issue. In the summer, the bank’s Chief Financial Officer, John Gerspach, said via Bloomberg that the bank is facing “legacy issues” because of mortgage products.
Last year, Citigroup’s estimates for legal costs were only $4 billion. JPMorgan who has continued to face legal problems also increased its estimations. We will have to wait and see whether regulators really will start turning their attention to Citigroup, although it looks like that is what the bank expects.