Tomahawk, WI 10/02/2013 (BasicsMedia) – Citigroup Inc (NYSE:C) may just have borrowed a copy out of JPMorgan Chase & Co (NYSE:JPM) regarding how to take care of legal matters that threaten to force it to spend a lot of time in court. The company has been facing a barrage of legal suits filed against it in the U.S courts, and this had started creating some concern among investors and the board of Citigroup as well. Just like JPM which has reportedly come into an agreement with the U.S. Justice Department to settle all its litigations at a cost of $11 billion, C appears to have done exactly the same thing.

 Citigroup Catching Up with JPM in Litigations

 Citigroup enjoys the distinction of being the third largest bank by assets in the U.S. The bank which leads here is JPM. It has thus far not attracted as many legal suits being filed against it as JPM, but this appears to be on the verge of changing. A number of lawsuits have been filed, and continue to be filed against C in the U.S courts. Citigroup has now stated that it expects to spend between $5 billion and $8.1 billion to take care of all its legal cases. This would be a wise move, although it is not clear whether it also expects to settle out of court like JPM, or not.

 If C was to settle out of court, I think it would be a very good move on its part. The company doesn’t need the bad publicity these cases will draw its way. Large U.S banks are already not looked at favorably by the citizenry and spending too much time in court responding too all manner of accusations made against you is not the way to win back the public. Moreover, investors may also start expressing reservations regarding how much they will be hurt by these cases, and this is something which Citigroup has to take into account.

 Costs of Litigations for Other Large U.S Banks

 Litigation costs among the U.S largest banks runs into billions of dollars. By virtue of its size and the number of cases filed against it, JPM leads in this as well having spent close to $23.1 billion since 2008. Bank of America, by virtue of being the second largest in the U.S. based on assets, has spent more than $19 billion. By the time it is through with its own litigations, C will have spent more than $8.1 billion. Well Fargo has spent the least amount out of all these large U.S. banks. It has only parted with $2.7 billion during this period.

In the first half of 2013 only, C has spent more than $1.4 billion to take care of litigation costs. This is quite challenging for the company bearing in mind that it is going through its own form of financial crisis. This could be the reason why its stock has not been doing too well of late. The market may be reacting negatively to the huge amounts which C is expected to lose on litigations, money which could have been reinvested back into the company. If the bank decides to resolve its cases in court, the litigation costs could reach unprecedented amounts.

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