had a big quarter on Wall Street, and credit costs were much lower. But that probably didn’t matter to many investors.
Instead, many Citi shareholders are focused on the bank’s regulatory woes. Beyond the $400 million penalty imposed by regulators last week, it is not yet clear how much it will cost to resolve the consent order the bank is now operating under. Among other things, the bank will need to invest substantially more in data infrastructure to help its risk management. Dealing with Washington can be costly in general, but technology upgrades at banks can be particularly drawn-out. Before the fine, Citigroup had already disclosed $1 billion in new technology investment for this year, but it hasn’t given specific further figures tied to the consent order.
Some investors might find this frustrating and give up on the stock too soon. Others might be tempted to jump