Citigroup Inc. began scaling back its operations in Russia weeks before President Vladimir Putin even invaded Ukraine.

Chief Executive Officer Jane Fraser and her team had spent months watching as tensions between the two countries rose. By January, the firm, which has the largest presence in both Russia and Ukraine of any U.S. bank, was ready to act.

On Thursday, Citigroup revealed the result of their quiet work: The firm had trimmed exposure to Russia by $2 billion in the first three months of the year, including offloading $300 million worth of derivatives linked to the country. Unlike many of its rivals, Citigroup didn't report any material losses from efforts to curb exposure.

"We started to carefully reduce our operations in and our exposure to Russia in January," Fraser said Thursday. "We benefited from being on the front foot here."

The firm, which has vowed it will ultimately exit both consumer and commercial banking in the country, now has $7.8 billion worth of loans, assets and other exposure tied to Russia, local companies and their counterparties, as well as Russia's central bank. That still gives it the largest exposure to the country of any major U.S. bank, though executives said Thursday they would continue to whittle away at the figure.

The company has seen efforts to sell those retail banking assets stall, Bloomberg News first reported last month. Still, Citigroup hasn't abandoned finding a willing buyer for its Russian businesses, Fraser said on Thursday.

"Our intention to sell significant portions of our local business in Russia remains," she said.

Before Russia invaded Ukraine on Feb. 24, Citigroup had said its Russian business served about 1,200 corporate clients. On Thursday, the firm told investors that roughly 85% of those were local subsidiaries of large, multinational companies with headquarters in the U.S. or in Europe.

In recent weeks, Citigroup's bankers have swooped in to advise many of those clients on unwinding their local businesses and shuttering operations. Fraser, who recently recovered from a case of COVID-19, said she's just returned from a trip where she met with European and Middle Eastern clients.

"It is security, energy, food, defense, cyber or operational resilience that has risen to the top of their strategic dialogue," Fraser said. "The Russian invasion of Ukraine and the sanctions it triggered unleashed an enormous supply shock on the world, further fueling inflation and placing global growth under considerable pressure."

Citigroup has continued to pay its 3,000 workers across Russia, Chief Financial Officer Mark Mason said Thursday. The company last year announced it was seeking to exit retail banking operations in the country, a retreat it expanded to include its commercial banking unit following the invasion.

The bank's continued presence in the region has put it central to U.S. President Joe Biden's sanctions regimes. When Russia invaded Ukraine, Citigroup was serving as paying agent on more than four dozen bonds tied to Russian sovereign and corporate debt.

In a largely clerical role, a paying agent ensures interest payments on bonds are properly paid out to investors. Citigroup and many of its rivals, under orders from the U.S. Treasury, have held up those payments or ordered clients to receive proper waivers from government agencies, forcing some corporations into technical default.

"We are in continuous communication with the U.S. government and we continue to do our part to enforce the sanctions regime," Fraser said.

Citigroup set aside $1.9 billion in reserves for souring loans directly tied to its Russian business as well as for borrowers that might be affected by the broader economic fallout from the war. The move weighed on profits, which slumped 46% in the first quarter, the bank reported Thursday.

The moves came as rival Goldman Sachs Group Inc. reported a $300 million loss after closing out positions and reducing exposure to Russia. JPMorgan Chase & Co. reported a $524 million loss in its trading division linked to market fallout from the invasion, about $120 million of which was tied to "extreme price movements" in nickel.

Citigroup, though, saw commodities trading revenue soar 173% in the quarter, Mason told journalists on Thursday. That helped buoy the firm's overall fixed-income trading revenue, which topped estimates for the quarter.

"On the back of everything going on again with the Russia-Ukraine war and some of the large shifts in commodities pricing and client demand, a lot of uncertainty and a lot of volatility," Mason said. "Sometimes that plays to opportunities to make markets for clients and that was the case here in the quarter for us."

With its winnowed down exposure, the bank now believes potential losses on its business in a severe stress scenario could be $2.5 billion to $3 billion. That's less than the $4.9 billion the company previously estimated.

"That range includes this taking a fair amount of time and working down exposures as we did in the first quarter as it plays out to there being a sudden scenario where we've got to exit," Mason said. "I don't think anyone can call when this ends, and how this ends. And that's what's creating a lot of the uncertainty back out there."

Jenny Surane reports for Bloomberg News.

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