- October 9, 2020
- Posted by: Stratford Team
- Category: Business
The feds slapped Citigroup with a $400 million fine after finding “serious and longstanding deficiencies” in the megabank’s internal practices.
Regulators on Wednesday ordered Citi to fix its faulty risk management systems, data governance and internal controls in addition to the hefty penalty based on its “unsafe or unsound banking practices.”
The moves by the Federal Reserve and the US Treasury’s Office of the Comptroller of the Currency came after Citi inadvertently sent $900 million of its own money in August to creditors of struggling cosmetics brand Revlon. Citi has had to sue some of the firms that refused to return the money, which was delivered because of an “operational error.”
The regulators didn’t mention the Revlon debacle, but said Citi has failed to set up the kind of internal infrastructure needed for a bank of its size, complexity and “risk profile.” The bank also lacked “defined roles and responsibilities” and was out of compliance with multiple laws and regulations, officials said.
The order from the Office of the Comptroller of the Currency gives the agency the right to veto any of Citi’s significant new acquisitions and requires the bank to set up senior teams devoted to addressing the problems.
Citi said it has “significant remediation projects underway” to shore up its internal infrastructure, controls and governance, but acknowledged that it has a long way to go to meet its regulators’ standards.
“We are disappointed that we have fallen short of our regulators’ expectations, and we are fully committed to thoroughly addressing the issues identified in the consent orders,” Citi said in a statement.
Citi President Jane Fraser also addressed the issues last month when the bank announced she would replace Michael Corbat as CEO. She said Citi would make the investments necessary “to ensure that we operate in a safe and sound manner.”
Citigroup shares were down 0.8 percent at $44.47 as of 11:39 a.m. Thursday.
With Post wires