US regulator loosens some compliance burdens for Citigroup – Financial Times

Citigroup has said a US bank regulator has loosened some compliance burdens imposed on the bank over deficiencies in risk control and data management practices stemming from a $900mn errant payment.

Citi mistakenly sent the funds to creditors of its client Revlon in 2020, which triggered a protracted legal battle with the cosmetics group. The Office of the Comptroller of the Currency and the Federal Reserve imposed a consent order on the bank that year, followed by an amendment to the order in July 2024.

The OCC said on Thursday it was terminating the 2024 amendment, which required the lender to submit a so-called resource review to the regulator, related to its payment of dividends. The underlying order from 2020 remains in place.

Citi was fined about $136mn when the 2024 amendment was issued for failing to correct long-standing problems in risk control and data management. The lifting of the amendment may be a sign that Citi, under chief executive Jane Fraser, has made progress on compliance mis-steps of recent years.

“Our transformation has been our number one priority, and we are dedicating the resources necessary to modernize our systems and strengthen our risk and control environment,” Citi said in a statement on Thursday.

The consent order imposed on Citi in October 2020 was accompanied by a $400mn fine for failing to correct “long-standing deficiencies” in its risk and control systems. A month earlier, the bank announced chief executive Mike Corbat would retire in 2021, several years earlier than expected.

Fraser, who took the reins in 2021, has instituted a dramatic overhaul of the bank in an effort to address some of its long-standing operational, compliance and profitability challenges.

At the time of the OCC’s 2024 amendment, Fraser said the bank had made “good progress” but acknowledged that regulatory issues were one of the areas that the lender had not moved quickly enough to resolve during her tenure.

In June 2024, the Federal Deposit Insurance Corporation voted to reject Citi’s so-called living will. The regulator said the bank’s plan to wind itself down in the event of a theoretical calamity and avoid a federal government bailout was “deficient”.

A month earlier, the bank was fined £62mn by UK regulators for failing to prevent a $1.4bn trading error, which occurred in 2022 and briefly convulsed European stock markets.

And in April 2024, Citi credited a client’s account with $81tn when it meant to send only $280. The error was reversed 90 minutes later and classified by the bank as a “near miss”.

Citi said in its statement on Thursday: “Most of our programs are at or nearly at target-state, and we are seeing the benefits of improved, standardized, automated and digitized controls.”