Citigroup Inc is looking at more efficient ways to meet regulatory requirements so it can return more capital to shareholders, Chief Financial Officer John Gerspach said at a conference on Tuesday. Citi, the fourth-largest U.S. bank, has $45 billion in excess capital that could be returned to shareholders eventually, Gerspach said. Roughly $29 billion of that is in deferred tax assets that cannot be distributed immediately, while another $15 billion to $16 billion is sitting idle not earning profits, he said. “We absolutely have to … begin to address that (excess capital) on which we’re earning nothing,” Gerspach said at an investor event hosted by Morgan Stanley. However, like other big U.S. banks, Citigroup cannot return capital to shareholders through stock repurchases or dividends without permission from regulators. The Federal Reserve oversees an annual stress test whose outcome determines how they can use capital. Those results are scheduled to be released in the coming weeks. Another process known as “living wills,” which requires banks to submit plans for dismantling themselves without taxpayer support in case of a crisis, also affects how they manage their businesses. Citigroup is also focused on improving its resolution plan, Gerspach said. In the past, it has failed the stress test and its resolution plan has been rejected. To arrive at its capital return goals, Citigroup must improve in particular the performance of its consumer business, which is behind on its return targets but should start to see the benefit of prior investments in its credit card unit in the second half of 2017.
Similar to its Wall Street peers, revenue from Citigroup’s trading business is tracking down 12 to 13 percent in the second quarter relative to the comparable period a year earlier, due to low volatility, Gerspach said. His comments come a day after the Trump administration released a plan that would ease regulations on big banks. Citigroup is waiting for more details before drawing conclusions, said Gerspach, who gave a “brief read-through” of the report. A basketball game between the Cleveland Cavaliers and Golden State Warriors featuring star athlete LeBron James was more compelling, he said.