Down is up

7 December 2017 By Antony Currie Follow @AntonyMCurrie

That’s how much planned U.S. tax cuts may cost the bank. In theory, investors should be up in arms. But being forced to dump tax credits of questionable real-world value should actually boost Citi’s returns – eventually.

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Citigroup Chief Financial Officer John Gerspach on Dec. 6 said that the bank could face a one-off, non-cash charge of some $20 billion if the U.S. corporate tax rate is reduced to 20 percent from 35 percent, as currently envisaged in a plan from the U.S. Senate.

Between $16 billion and $17 billion would come from a reduction in the bank's deferred tax assets, which can be used to reduce future tax bills. Another $3 billion to $4 billion would be the result of bringing back overseas earnings.

At present Citi has $45.5 billion of deferred tax assets, $43.2 billion of which are from its U.S. operations.

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