Citigroup Inc. expects to charge a non-cash charge to earnings of around $ 20 billion if the US Senate version is enacted. UU Of the project of fiscal reform, said the Financial Director John Gerspach.
The blow to the benefit would derive mainly from the The bank wrote down its deferred tax assets in the period in which the invoice is signed, Gerspach said at an investor conference in New York on Wednesday. Approximately $ 3 billion to $ 4 billion of the charge would come from the imposition of unremitted foreign earnings.
"According to what we understand on that tax bill, our best estimate would be in the year that the bill is signed that we will probably have a blowout of $ 20 billion," said Gerspach.
The bank said in its investor day of July that the charge could be $ 15 billion, a number that assumed a corporate rate of 25 percent and a one-time repatriation of profits in the Foreign. JPMorgan Chase & Co. said on Tuesday it expects a load of up to $ 2 billion, largely driven by foreign earnings facing taxes, while [Capital Federal Corp.] (19659005) said on Wednesday that expected an adjustment of $ 1.8 billion tax assets.
The lower tax rate means that many banks will have to write off deferred tax assets, which accumulate when a company loses money and can not immediately enjoy the tax benefits of those losses. Lower taxes will allow higher long-term profits, but a one-time profit hit can generate a brown quarter, and even a year, for a lender's results.
A large part of the DTAs are excluded from the accounting as regulatory capital, so the amortizations will not have a great impact in those proportions. Gerspach said the reduction to regulatory capital would be approximately $ 4 billion and that means the amount it plans to return to shareholders through dividends and share buybacks in the next few years will not change.
Even so, it is a greater reduction to the regulatory capital than the illustration of the bank in July, which had meant a cut of $ 2 billion.
Read more: Other banks intervene in the tax bill
Citigroup had $ 43.2 billion in deferred tax assets from the US. UU to September 30, according to a regulatory presentation. Much of that total was accumulated during the financial crisis, when the bank had to accept a government bailout.
Citigroup shares extended their decline after Gerspach comments and closed down 1.4 percent, the biggest drop in a month.
– With the assistance of Jennifer Surane