Wall Street counts the cost

Citigroup and Credit Suisse were yesterday counting the cost of the scandals that erupted on Wall Street last year when both delivered sharply lower results.

Citigroup, the world's largest financial services group, said profits had fallen 37% to $2.4bn (£1.5bn) in the fourth quarter after charges including its share of the industry wide settlement of allegations that banks issued deliberately misleading research during the dotcom boom. Provisions have also been made for regulatory inquiries and private lawsuits relating to the bank's dealings with Enron, the bankrupt energy firm.

Credit Suisse hit by many of the same concerns ran up record losses.

Sanford Weill, Citigroup chief executive, summed up a difficult year: "During 2002, our company faced several significant challenges; continued weakness in global markets, record bankruptcies in the developed world, political and economic upheaval in a number of countries in which we operate, and intense scrutiny of its business practices."

Citigroup is taking a total charge of $1.3bn, as well as increasing its bad debt reserve by a further $254m as loans to the telecoms and technology sector and in volatile countries like Argentina are written off.

The charge was behind a loss of $344m at Salomon Smith Barney, Citigroup's investment banking division. Salomon revenues in the quarter were 9% lower at $4.7bn.

Across the year, Citigroup was buoyed by its consumer division, including retail banking and credit cards. The consumer division grew 21% in 2002. In the full year, group profits were 8% higher at $15.3bn.

The charges at Credit Suisse - including a $150m settlement with US regulators, a further $250m against the sale of its Pershing business and an additional $450m against legal actions relating to Enron - helped push the group into a Sfr3.4bn (£1.5bn) loss for the year. But senior executives insisted the aim was to get the group back into the black in this year and made it clear that the firm intends to hang on to its investment bank, Credit Suisse First Boston.

"The board has made it very clear that it is committed to current structures and businesses," said co-chief executive John Mack.