US Regulators Want Citigroup to Fix Risk Management Faster, Report Says

Regulators at the Federal Reserve reportedly grown impatient with Citigroup’s response to its complaints about the bank’s systems for preventing mistakes.

The regulators have repeatedly met with executives of the bank and have cautioned them that it could take more actions if the bank doesn’t speed the improvements to its risk-management system, The Wall Street Journal reported Wednesday (Sept. 14), citing unnamed sources.

The Federal Reserve first reprimanded Citigroup two years ago, and the bank is to submit a plan to the regulators Thursday (Sept. 15), according to the report.

“We have taken decisive actions to simplify our firm and we will continue to act with urgency to modernize the bank for the digital age and strengthen our risk and control environment,” a Citigroup spokeswoman said, per the report. “We are completely committed to the sustainability of this effort and to executing at the level expected of us.”

In consent orders in 2020, the Federal Reserve and the Office of the Comptroller of the Currency (OCC) demanded Citigroup improve technology and procedures in order to better detect mistakes such as problematic transactions and risky trades, according to the report.

In an effort to do so, Citigroup has dedicated another 30,000 employees to work on the problems in the last two years and is shedding some operations in other countries to “simplify the bank,” per the report.

One mistake cited by regulators is a case in which Citigroup accidentally sent $900 million to a company’s creditors, according to the report.

As PYMNTS reported about that incident in 2020, the bank sent that amount to Revlon Inc. lenders due to a clerical error.

Read more: Citi Wants Revlon Lenders To Return $900M Paid In Error

At the time, Revlon was involved in a legal dispute with some of its lenders. Citi executives asked for the money back, saying it was paid inadvertently due to an operational error, but some of the lenders refused to return it.