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Citigroup's FX deals might have made only $1 million but cost $2.5 billion

A view of the exterior of the Citibank Corporate headquarters in Manhattan, May 20, 2015. REUTERS/Mike Segar

NEW YORK (Reuters) - Employee misconduct in foreign exchange trading that cost Citigroup Inc $2.5 billion in fines and penalties might have made only $1 million for the bank, an executive said on Wednesday.

Speaking at an investor conference, James Forese, president of Citigroup and head of its investment bank, described the episode as "hugely painful" and said the bank is spending more time than ever to reduce "conduct risk" by employees.

Forese also said the investment bank will need to increase revenue to continue to improve efficiency as the benefits of cost-cutting taper off.

Trading revenue so far in the second quarter is "a lot like" the previous year's quarter, Forese also said.

(Reporting by David Henry in New York; Editing by Diane Craft)