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Citi will have a lot of explaining to do when it releases its upcoming quarterly report

It has not been a good few months for Citigroup. The sprawling international banking giant has been trying to shake its reputation as one of the weakest links in the US financial system since 2008.

Now the latest scandal at its Mexican unit, Banamex, is the target of a criminal probe by the Federal Bureau of Investigation, the New York Times reported yesterday. And that’s just one of the nettlesome problems that that the bank’s relatively new CEO, Michael Corbat, will be forced to explain in exhaustive detail when the bank reports first-quarter results in two weeks. Citi’s executives will have to address questions about those results in an earnings call scheduled for April 14.

The Banamex scandal already forced the bank to restate its fourth-quarter results by $235 million, due to alleged false billings. Going forward, the company may have to set aside additional cash to deal with possible regulatory or legal fallout. Regulators have expressed concerns that the bank’s risk controls are not up to snuff, and that’s a part of what the FBI is also looking into, the Times reports. Citi declined to comment on the reports.

It’s unclear if  issues around Citi’s operations and controls played a role in the Federal Reserve’s decision to reject Citi’s plans to return cash to shareholders by buying back shares and boosting dividends.

Wall Street analysts have issued dour predictions for Citi’s performance. Yesterday, analysts following Citi for JPMorgan Chase lowered their price target for Citi’s shares and cut their first-quarter earnings estimate for Citi’s earnings. They cited the aforementioned legal issues, as well as the weak results in the bank’s fixed income, currencies and commodities (FICC) trading unit. Citi, as well as other banks, previously warned investors that FICC will likely be weak this quarter.

It’s hard to place all of the blame for the firm’s struggles on Corbat, who has been trying to streamline the company’s business since he took over from his ousted predecessor (paywall) Vikram Pandit in back in October 2012.And Pandit himself had difficultly reconfiguring the behemoth institution engineered by Sandy Weill.

At any rate, Citi’s management is likely in for a long conference call as it tries to quell worries. And already, there’s some indication that shareholders aren’t sticking around to hear any explanations. Citi’s shares are down 9% so far this year, drastically underperforming the KBW bank index, which has risen nearly 5%.

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