Federal banking regulator fined on Wednesday
$ 400 million and ordered the country’s third-largest bank to fix risk management systems, citing “significant continuing shortages”.
In a consensus order agreed by the Bank of New York board, the Federal Reserve blamed Citigroup for failing in “various areas of risk management and internal control,” including data management, regulatory reporting and capital planning. The Office of the Currency Auditor said the fine was a punishment for the bank’s “long-term failure” to resolve problems with its risk and data systems.
The Wall Street Journal reported earlier that the Fed and the OCC were plans to scold Citigroup because it did not improve risk management systems – an extensive set of technology and procedures designed to detect troubled transactions, risky transactions and anything else that could harm the bank.
Citigroup said it was taking steps to address regulators’ concerns, including a scheduled review of its risk systems. The expected regulatory reprimand has accelerated planning for the departure of CEO Michael Corbat, the magazine reported earlier. Mr. Corbat felt it was the expensive, multi-year repair better left in the hands of his successor, Jane Fraser, the magazine reported.
“We are disappointed that we have exceeded the expectations of our regulators and are fully committed to addressing in detail the issues identified in the consensus orders,” the bank said in a statement. “Citi has significant ongoing remediation projects to strengthen our controls, infrastructure and governance.”
Shares of Citigroup fell 1% in after-hours trading to $ 44.30.
(More to follow.)
Write to David Benoit at [email protected]
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