Banking regulators have questions for Citigroup
2022.11.23 12:55
Banking regulators have questions for Citigroup
Budrigannews.com – Citigroup (NYSE:) was found to have a weakness by the Federal Deposit Insurance Corporation and the U.S. Federal Reserve.The so-called “living will” of Inc., which explains in detail how the company would be wound up in the event of bankruptcy.
According to banking regulators, Citi’s inability to produce timely and accurate data during a time of financial stress could be negatively impacted by issues with its data governance.
Following the announcement, Citi’s stock dropped 2%.
Martin Gruenberg, acting chairman of the FDIC, stated in a statement that the flaw “requires urgent attention by the firm’s senior management and board of directors.”
The regulators gave seven other large banks that submitted resolution plans the all-clear, and Citi had until January 2023 to submit its plan to fix the problems.
In an enforcement action against Citi in October 2020, the Fed had previously identified issues with Citi’s data quality and management.The Fed had coordinated Citi to address a few “longstanding lacks” in its inside controls to further develop its gamble foundation and inward administration.
Citing similar concerns, the Office of the Comptroller of the Currency (OCC) fined Citi $400 million in 2020.
In a statement released on Wednesday, Citi stated that it is “completely committed” to addressing the flaw and is investing heavily in data integrity and management.
According to the bank, “the result of these efforts will be more streamlined systems that improve both the quality of our data and the speed with which it can be accessed.”
In September, Reuters reported that Citi had provided the Federal Reserve and the OCC with a comprehensive, multi-year plan outlining steps to address its internal controls and risk management flaws.
A botched transfer of nearly $900 million to lenders of the struggling cosmetics company Revlon two years ago highlighted flaws in Citigroup’s internal controls.European stocks experienced a so-called flash crash in May as a result of Citigroup’s erroneous trade.
According to Morningstar banking analyst Eric Compton, banks’ data management issues are frequently brought to the attention of regulators due to their potential interdependence and broad impact.
He stated, “Citi is not the first bank to have its resolution plan hit.”
The Fed and the FDIC found flaws in the living wills of Bank of America Corp. (NYSE:) during the regulators’ 2019 review of large bank resolution plans, which takes place every two years.NYSE: BNY Mellon,Morgan Stanley (NYSE:), Citigroup,NYSE: State Street Corp.as well as Wells Fargo (NYSE:)Co. These issues were caused by the banks’ inability to generate data under pressure in order to carry out their resolution plans.
