Citigroup faulted by U.S. banking regulators for poor data management in ‘living will’ review

CEO of Citigroup Jane Fraser testifies all through a listening to just before the Property Committee on Financial Expert services at Rayburn Household Business Building on Capitol Hill on September 21, 2022 in Washington, DC.

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Citigroup requirements to deal with weaknesses in how it manages money info, according to a assessment of the largest banks’ so-identified as residing will plans, U.S. banking regulators stated Wednesday.

The New York-primarily based bank’s troubles could harm its capacity to produce accurate reviews in times of duress, and that could hamper its skill to effectively execute resolution organizing, the Federal Reserve and the Federal Deposit Coverage Company informed the bank in a letter.

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The most significant and most essential U.S. financial institutions have to submit comprehensive plans to regulators that explain how they can be promptly unwound in the event of a massive disruption or personal bankruptcy, aspect of the reforms that emerged from the 2008 financial disaster. In a former round, six businesses which include Lender of America, Wells Fargo and Morgan Stanley have been found to have shortcomings in their ability to produce information, but the companies dealt with those people concerns, the regulators stated.

For the most current evaluate, Citigroup was the only financial institution between the eight establishments that was found to have a shortcoming in its resolution strategy, the regulators mentioned.

The discovering shows that Citigroup, led by CEO Jane Fraser since early 2021, is even now struggling to enhance its techniques soon after an embarrassing incident that served accelerate the retirement of Fraser’s predecessor. Fraser has explained that a single of her most important priorities was to handle regulators’ concerns and regain reliability with traders.

The concerns stem from previously worries right after the financial institution accidentally wired $900 million to Revlon lenders in 2020. Regulators hit the lender with a $400 million high-quality and a pair of consent orders immediately after that episode and demanded advancements to its risk management, information and internal controls.

“Concerns relating to the Coated Company’s details governance software could adversely affect the firm’s ability to produce timely and accurate info and, in particular, could degrade the timeliness and accuracy of vital metrics that are integral to execution of the firm’s resolution technique,” the companies advised Citigroup in a letter dated Nov. 22.

The company has to deliver a roadmap to tackle the issues by January, they said.

In a assertion, Citigroup claimed it was “wholly dedicated” to addressing the shortcoming located in its 2021 resolution prepare.

“As part of the transformation Citi has embarked upon, we are generating substantial investments in our details integrity and details management, as the letter notes,” the lender mentioned. “We will leverage that do the job to remediate the shortcoming discovered right now, as we acknowledge there is a lot much more operate to do.”

Shares of Citigroup slipped 2.2% in early trading.

With CNBC’s Jeff Cox.