Citigroup faces $50m hit from homeworking trader’s ‘fat-finger’ blunder

CITIGROUP could face a $50m (£40m) hit after a London-based trader triggered a “flash crash” in European markets while working from home.

The trader, who has been placed on leave, incorrectly added an extra zero to a trade last month while working remotely and caused a knee-jerk sell-off in Swedish stocks, wiping out as much as €300bn in a matter of minutes.

Citi is still calculating the losses from the so-called “fat-finger” mistake but the bank is expected to take a hit of at least $50m, Bloomberg reported. The lender has so far determined that the mistake was the result of human error rather than the fact that the trader was working from home.

The revelation is likely to raise questions about banks allowing traders to work remotely and whether the controls and checks in place are adequate.

Citi is still in talks with regulators and exchanges about the incident, which occured over the May bank holiday.

The error also came as a blow to Citi’s chief executive Jane Fraser who has been seeking to increase the bank’s revenue from share trading and who has attempted to improve its financial controls. Ms Fraser, who became the first woman to run a Wall Street bank when she took over in September 2020, has ordered thousands of employees to focus on improving Citi’s risk and controls systems.

A “flash crash” is a sharp fall in asset prices and is often caused by a trading mistake. In this case, the error caused Sweden’s OMX Stockholm 30 Index to plunge 8pc in just five minutes before recovering most of the losses shortly after. Other bourses, including those in Denmark, Norway, Germany, Italy and France, also slumped but recovered.

Citi was contacted for comment.