Citigroup is facing losses in the fourth quarter due to the severe depreciation of the peso and the significant costs of restructuring.

Citigroup's fourth-quarter performance is expected to be impacted by the significant depreciation of the Argentine peso and the high costs associated with restructuring plans.

Citigroup will release its fourth-quarter and full-year 2023 earnings report this Friday. However, on Wednesday evening, Citigroup issued a warning that the expenses related to the depreciation of the Argentine peso and the bank's restructuring were much higher than the CFO had previously disclosed. The bank stated:

"Due to the recent depreciation of the Argentine peso, we incurred a loss of approximately $880 million in the fourth quarter. At the same time, we recorded an additional $780 million in expenses related to global restructuring."

It is worth noting that these expenses are significantly higher than the "billions of dollars per transaction" expectation that Citigroup's CFO, Mark Mason, shared with investors at a conference hosted by Goldman Sachs on December 6th.

In addition to these losses, Citigroup also disclosed on Wednesday:

"We have set aside $1.3 billion in reserves to address cross-border and cross-currency exposures in Argentina, as well as risks associated with Russia."

"We also expect to incur $1.7 billion in costs to replenish the deposit insurance fund of the Federal Deposit Insurance Corporation."

Currently, Citigroup is in a critical phase of restructuring, aiming to become a leaner and more profitable company. Over the past two decades, Citigroup has been plagued by high expenses and reputation issues, making it the lowest-valued bank among the six largest banks in the United States.

Wells Fargo analyst Mike Mayo believes that all these expenses may result in a loss of $1 per share for Citigroup in the fourth quarter. As a result, Citigroup's stock price fell over 1% in pre-market trading on Thursday.

This week, US bank stocks will kick off the new earnings season. Analysts predict that the total amount of bad loans for the four largest US banks in the fourth quarter of last year is expected to reach $24.4 billion, an increase of nearly $6 billion compared to the same period in 2022, which may lead to a decline in bank stock profits in the fourth quarter.

Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo will be the first to release their earnings reports on January 12th, while Goldman Sachs and Morgan Stanley will announce their results on January 16th.