Citibank fined €1.3m by Central Bank for six breaches of lending rules
THE Central Bank has fined Citibank €1.3m after it admitted six breaches of the code of practice governing loans to directors, executives and large shareholders.
The US banking giant’s European headquarters is in Ireland.
In a statement Citibank said that it was “pleased” to resolve the matter, and said it had initially informed the Central Bank of the issues involed.
“It did not affect clients,” a spokesperson for the bank added.
The fine was levied after the bank was found in breach of a code on ‘Lending to Related Parties’ that requires lenders to have proper systems, controls, independent oversight and regulatory reporting processes in place to support their related party lending.
That includes a requirement to obtain the prior approval of their board, or a subcommittee of the board, before entering into or varying loan transactions with related parties including directors, senior managers, significant shareholders of the firm, and other connected parties.
The investigation by the CBI found that Citibank breached certain provisions of the code from its introduction in January 2011 to September 2016.
That included a failure to have the necessary policies and processes in place to give effect to the code.
In addition, the bank failed to report certain related party exposures to the CBI.
The investigation also found a failure to report certain deviations from the requirements of the code to the CBI within prescribed time limits, as well as a failure to obtain approval of its own related party lend- ing committee prior to granting or varying certain loans to related parties.
Seána Cunningham, the CBI’s director of enforcement and anti money laundering, said that the investigation found that Citibank failed to put in place the necessary governance, policies and procedures to implement the regime until two years and eight months after the code came into effect.
“Those deficiencies were followed by breaches of reporting and loan approval requirements. The breaches are admitted by the firm. Citibank has fallen far short of the Central Bank’s expectations in this regard, which is wholly unacceptable,” Ms Cunningham said.
“We require the boards and management of regulated entities to take their regulatory responsibilities seriously and to fully implement all applicable regulatory requirements,” she added.