Citi’s Irish unit takes dividend breather after $1.66bn payments

Citigroup’s Dublin-based European banking unit, which handed $1.66 billon (€1.5 billion) of excess money on its balance sheet to its parent by way of dividends in the past two years, has said it does not plan to make such a payment this year on its 2018 results, even as its profits rose.

Fillings with the Companies Registration Office show that Citibank Europe's profit after tax rose to $879 million last year from $600 million in 2017, helped by a "strong performance" in its treasury and trade solutions (TTS) business as well as its securities services division.

Earnings were also boosted as the company’s bad loan losses slumped to $9.9 million from $168 million.

The lender's assets grew to $60.6 billion from $49.6 billion a year earlier, mainly as a result of its establishment of a German branch that took over existing Citigroup assets that were based in the country.

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Citibank Europe’s assets effectively doubled in size to about $50 billion and its employees ballooned to 9,000 at the start of 2016 when the group’s United Kingdom-based Citibank International unit was folded into the Dublin operation.

The merger was part of a drive by Citigroup's global chief executive Michael Corbat, in position since late 2012, to simplify the group's unwieldy structure and the cost of its number of legal entities, in order to reduce risk after its $45 billion US taxpayer bailout during the financial crisis.

Rivals

Completed almost six months before UK voters decided to quit the European Union, it left the group well placed as rivals scrambled to find ways to maintain access to the single market.

The $1.66 billion of dividends were paid over in the two years following the merger transaction.

Citibank Europe is led by Czech-born chief executive Zdenek Turek, with Limerick native Cecilia Ronan serving as chief administration officer and chief country officer for the Republic, where it employs about 2,500 people.

All told, Citibank Europe employed an average of 9,293 people across Europe last year, up from 8,915 in 2017. Its staff costs rose by almost 12 per cent in 2018 to $720.2 million, according to the annual report.

Monitoring

“The company is closely monitoring the potential impacts of the United Kingdom’s proposed exit from the European Union,” the report said. “As part of the company’s overall Brexit strategy, the board has initiated a process to transfer the company’s UK branch retail business to a separate legal entity in the UK in 2019.”