Citigroup fined over risk issues
Citigroup Inc. has agreed to pay $ 400 million and must seek the U. S. government’s sign- off for major acquisitions after federal regulators identified several longstanding problems with its risk controls.
The bank was f ined by the Office of the Comptroller of the Currency for what the agency called an ongoing “failure to establish effective risk management and data governance programs and internal controls,” according to a Wednesday statement.
The agency also demanded that Citigroup seek its approval before “significant new acquisitions” and reserved the right to require changes in senior management if the company doesn’t act quickly to address its shortcomings.
At the same time, the Federal Reserve issued a cease- and- desist order that directs the lender to “correct practices previously identified by the board in the areas of compliance risk management, data quality management, and internal controls.”
The orders come weeks after Citigroup mistakenly sent $ 900 million to lenders of cosmetics giant Revlon Inc. The bank ultimately chalked the wayward payment up to employee error.
The ensuing legal battle was an embarrassment for the bank as many of the lenders balked at Citigroup’s pleas to return the funds.
Citigroup has been plagued for years by issues with its core operating systems, which were cobbled together through many acquisitions in the early 2000s. Decades later, regulators are now requiring the bank to improve the ways it manages data and handles risk.
— Bloomberg