CITIGROUP FINED $400 MILLION FOR MULTIPLE BREACHES & LAPSES
US regulators on Wednesday said that CITIGROUP INC. has consented to pay $400 million as fine and chalk out plans to resolve continued risk management and operational problems that have led to multiple breaches and penalties over the years. Repeated warnings notwithstanding, the country's third-largest bank had failed to address these issues for years, the Federal Reserve and Office of the Comptroller of the Currency said. CITIGROUP INC must take comprehensive action to fix its risk management, data governance, internal controls and some compensation practices, the regulators said in separate directives.
The orders could restrain CITIGROUP INC's capability to make decisions regarding acquisitions and personnel, further escalating the challenges facing incoming Chief Executive Officer Jane Fraser who also has to revive the bank's dwindling revenues and tainted brand. According to the OCC, CITIGROUP INC's risk management has not been "commensurate with the bank's size, complexity and risk profile."
CITIGROUP INC responded by saying that it was disappointed to have fallen short of the regulatory expectations and that it had significant remedying projects underway. It pointed out to more than $1billion in spending this year to tackle the problems.
The hefty fine comes after heightened scrutiny of CITIGROUP INC's operations in the wake of the bank mistakenly sending Revlon creditors $900 billion of its own funds in August this year. The bank is battling in court some of the lenders who are refusing to return the payment. Post the development, it was also announced that the current CEO MIKE CORBAT would retire earlier than expected. Last month, she reportedly said, "We will invest in our infrastructure, risk management and controls to ensure that we operate in a safe and sound manner."