Citigroup Inc. said yesterday that it will take a $1.5 billion charge to cover the mounting costs of its regulatory and legal difficulties as well as to cover loan losses.

The nation's largest financial institution was the first to release a rough estimate of how costly allegations of compromised stock research and favoritism in the distribution of initial public offerings could prove.

The bank, which agreed to pay $400 million to settle those charges with an array of securities regulators last week, said it has set aside $1.3 billion to bear the cost of that settlement and any private lawsuits, shaving 25 cents a share off its fourth-quarter earnings. The reserve will also cover the costs of any government penalties and private civil litigation arising from Citigroup's alleged role in hiding the debt of Enron Corp., but Citigroup executives declined to discuss how the charge was allocated.

The bank will also increase its $11 billion in loan-loss reserves by $200 million, shaving another 4 cents per share off its fourth-quarter earnings, citing weaknesses in its energy loans and continued economic upheaval in Argentina.

Citigroup stock closed yesterday at $37.68, down 1.2 percent or 46 cents.

Todd S. Thomson, chief financial officer of Citigroup, said the reserves do not cover attorneys' fees, potentially a major cost as he estimated that the private litigation could easily take five years or more to resolve. Nor is the reserve a safeguard against potential losses from the collapse of WorldCom Inc. On Friday, a federal judge in Houston ruled that corporate advisers such as Citigroup could be held primarily responsible for fraud if they knew the deals they structured might mislead investors about their clients' finances. Citigroup executives said they had anticipated that decision, which opens the door for even greater liability stemming from the Enron debacle.

"We feel like we have substantial defenses to the private litigation here and we will be defending these suits very vigorously," Thomson said.

Sanford I. Weill, Citigroup's chairman and chief executive, said that even with the charge Citigroup expected to post record earnings for 2002. Citigroup, like most major banks, will announce its fourth-quarter and annual results in January.

Citigroup officials sought to take the hit to earnings now, setting the money aside to cover the legal fallout from the scandals of 2002 and hopefully calming investor uncertainty over how much they would cost.

"The settlement [with securities regulators] will bring to a close a difficult chapter in our history," Weill said in a statement. "Our company is better positioned for the future as a result."

Citigroup agreed on Friday to pay by far the largest chunk of the $1.43 billion settlement reached between 10 brokerage houses, commercial and investment banks on one side, and the Securities and Exchange Commission, NASD, New York Stock Exchange, attorney general of New York and a group of state regulators on the other. The bank, parent of brokerage Salomon Smith Barney Holdings Inc., pledged to pay $300 million in penalties, $75 million for independent research and $25 million for investor education.

Separately, Bank of America Corp. announced it would take a $1.2 billion charge in the fourth quarter to cover the cost of bad loans to a bankrupt airline it did not disclose, but which was named by analysts and in industry reports as United Airlines. The company also cited a shaky utilities sector.

Many utilities companies are facing mounting debt problems and several have sought to refinance billions in syndicated loans made by major banks.

A tax-related gain of $488 million in the quarter will partially balance the addition to its loan-loss reserve. The company said it expects to report between $9.17 billion and $9.27 billion in net income, or earnings per share of $5.87 to $5.92, for 2002.

Bank One Corp. had earlier announced it would write off $45 million in bad loans to United Airlines, and Bank of New York Co. had said it would take a quarterly charge of $390 million for losses on aircraft leases to the carrier.

Bank of America's shares closed at $70.11, down 0.3 percent or 19 cents.

Citigroup Chairman Sanford I. Weill said the bank still expects to post record earnings for 2002.