Citigroup boasted higher than expected earnings this quarter, even in light of a $7 billion settlement over bad mortgages with the Department of Justice. However, their equity-trading arm was hit with a major revenue cut. Citi is attributing this tumble to Ukraine. 

Overall, Citi had a net income of $181 million and revenue of $19.3 billion, but their equity market revenue was $659 million, a $226 million decline. About $100 million of this decline was due to the cost of protecting against potential Ukrainian market turmoil. The bank took certain positions to protect itself from stock swings. 

“We actually hedged our equities book in Europe in anticipation of significant negative market reaction to the Russia-Ukraine situation, which ultimately didn’t materialize,” said Chief Financial Officer John Gerspach on a press call, “Our actions to de-risk our book resulted in realized losses during the quarter.”

The Chicago Board Options Exchange Volatility Index (VIX) fell 17 percent in the second quarter. However, since Ukrainian President Petro Poroshenko called off the ceasefire and began a major offensive against the insurgents, VIX is up 3 percent. Along with the Ukrainian crisis, the equity trading decline can be attributed to some executives departing. Simon Yates, former head of equity derivatives, has left the bank, as well as Michael Pringle, global head of equities trading, and Adrian Faure, global head of equity sales.