The news at a glance
Citigroup: Plenty of problems for new CEO to fix
Citigroup lost its effort to undo a half-billion-dollar mistake, said Chris Dolmetsch in Bloomberg .com. U.S. District Judge Jesse Furman said this week that 10 creditors of Revlon could keep the staggering sum the bank “mistakenly transferred in August while trying to make an interest payment.” Some hedge funds in the creditor group had already returned their portion of the money, but others argued that the transfer “didn’t look like a mistake when it arrived,” and since it settled Revlon’s debt, “it was theirs to keep”—an argument Furman accepted. “The downside of working from home, maybe the dog hit the keyboard,” one fund manager joked to colleagues after Citi asked for its money back.
Incoming Citi CEO Jane Fraser has a massive cleanup on her hands, said John Foley in BreakingViews.com. Fraser, who will begin her tenure as the first woman to lead a major U.S. bank on March 1, has “to act as a sort of plumber,” fixing Citi’s pipes “before they leak again.” Among the big banks, only Wells Fargo’s shares have performed worse over the past decade. What’s especially damaging, though, has been “the perception that the bank has yet to get on top of its corrosive habit of carelessness.” The mistaken Revlon transfer was a “painful example of human error” that’s become typical of the bank. Until Fraser tackles these issues, it will be hard “to address bigger questions.”