Citigroup fined $400 million by regulators, agrees to fix 'longstanding deficiencies'

By Pete Schroeder
WASHINGTON (Reuters) - Citigroup Inc agreed to pay a $ 400 million fine and develop a comprehensive recovery plan after US regulators discovered "several longstanding deficiencies" and operational disruptions, US regulators said on Wednesday with.
The Federal Reserve and Office of the Currency Auditor said the bank needed "major corrective action" and needed to overhaul its risk management, data management and internal controls across the company.
The Fed said the move "requires the company to address several long-standing shortcomings."
"For several years the bank has failed to implement and maintain an enterprise-wide risk management and compliance risk management program, internal controls or data governance program that matches the size, complexity and risk profile of the bank," the OCC said in order his consent.
In a statement, Citi said it was disappointed in failure to meet regulatory expectations and had "major refurbishment projects" underway.
The heavy fine follows renewed public and regulatory scrutiny of Citi's operations after a "mistake" caused the bank to mistakenly send Revlon creditors $ 900 million of its own funds in August. The bank is pursuing legal action against some lenders who refuse to return the payment.
Since then, it has been announced that CEO Mike Corbat will retire earlier than expected and that the bank will increase investments in its operating systems by $ 1 billion.
Incoming CEO Jane Fraser, who will take over early next year, has made improving risk and control systems a priority. "We will invest in our infrastructure, risk management and controls to make sure we are working safely and soundly," she said in a statement last month.
The OCC regulation gives the supervisory authority the right to veto significant new acquisitions by the bank and, if necessary, to request changes to the bank's management or board of directors. In addition, Citi must form new high-level teams to address the issues, and the Board of Directors must regularly update regulators of the progress of the major overhaul.
Regulators said Citi had failed to address concerns about its operational issues for years, with some issues dating back to 2013. In recent years, the OCC has fined Citi more than $ 70 million for a number of mistakes, including fair living violations and flood insurance regulations and rules on how long banks can hold foreclosed property.


(Reporting by Pete Schroeder; additional reporting by Michelle Price; editing by Chris Reese, Richard Chang and Cynthia Osterman)

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