The Wall Street Journal: Citigroup likely to take $20 billion hit from Republicans’ tax plan
Citigroup Inc. finance chief John Gerspach said Wednesday the bank is likely to take a hit of about $ 20 billion to profits under the tax plans recently passed by Congress.
The charge will result from the bank writing down the value of what are known as deferred tax assets as well as the impact of changes to rules regarding the repatriation to the U.S. of profits earned in other countries.
Gerspach’s comments, made at a financial-services conference in New York, build on previous guidance given by the bank that tax-code changes could result in a hit of about $ 15 billion if the rate was cut to 25%. Over the long term, though, any immediate hit to profits at Citigroup C, -1.44% and other banks with these tax assets are likely to be offset by higher net income due to a lower tax rate.
Gerspach said that neither the charge, nor a resulting $ 4 billion decline in the bank’s regulatory capital, would affect Citigroup’s plan to return $ 60 billion to investors through 2020.
An expanded version of this report appears on WSJ.com
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