NEW YORK (TheStreet) -- Citigroup (C) on Tuesday disclosed a surprising jump in legal costs, but analysts see a light at the end of the tunnel for the giant bank.
Citigroup and other big banks like Bank of America (BAC) and JPMorgan Chase (JPM) have between them paid out an estimated $184 billion in fines for bad behavior, since 2009.
Speaking at a Goldman Sachs conference Tuesday, Citigroup CEO Michael Corbat said the $2.7 billion legal charge would largely resolve costs related to alleged wrongdoing tied to foreign exchange trading, money laundering and LIBOR manipulation, which he called "the big things for us that remain out there" in the "heightened legal and settlement environment" following the 2008 financial crisis.
Citigroup shareholders weren't thrilled with the announcement. They sold Citigroup shares but then bought them back shortly afterward. Still, Citigroup shares were down roughly 1% on Tuesday.
But the news is actually quite encouraging, according to Keefe, Bruyette & Woods analyst Brian Kleinhanzl. He had been expecting foreign exchange legal costs to reach $2.7 billion on their own.
"It seems like they were able to cover more litigation issues with that charge so it certainly is positive," Kleinhanzl said.
The analyst was also encouraged by Citigroup's disclosure of $800 million so-called "repositioning," including layoffs, branch closings and the like.
Kleinhanzl called the big charge an "acceleration," which "removes the slow drip of repositioning that investors have been seeing over the past three years." In short, another positive.