Citi’s Makeover Has Yet To Reach The Compliance Department
Just four months ago, Citigroup completed a major management overhaul, restructuring into five business lines and cutting its number of management layers from 13 to eight. (Well, sort of completed: There are still another 15,000 or so jobs to be cut over the next couple of years.) This is all in service of Jane Fraser’s effort to finally turn around the most unwieldy, cumbersome bank on Wall Street, one which may still founder on the shoals.
Interviews with more than three dozen current and former Citigroup executives, board members, clients, competitors and investors reveal that doubters are easy to find. Regulators and shareholders want her to accelerate. Some clients think she’s moving too fast, including a top investment manager that bristled at the abrupt changes to Citi staff and services.… Fraser, who became CEO in March 2021, acknowledges her plan still has years to go—and she may not have years. If the strategy doesn’t pan out, calls to break up the once-dominant bank will grow louder.
Well, one thing that hasn’t abruptly changed—not that anyone’s going to be cheering for it, least of all those who thing Citi is just big enough to fail at essentially everything—is the bank’s remarkable propensity for stepping in it, compliance-wise. A few weeks ago, the Federal Reserve and Office of Comptroller of the Currency fined Citi another $136 million for having failed to fix compliance, internal control and risk management structures that it had promised to do four years ago (when it paid $400 million over the same issues). Just before that, the FDIC took issue with the bank’s “data integrity and data management issues.” And Citi’s troubles with the feds (and, specifically, the Fed) don’t end there.
The bank repeatedly breached the Federal Reserve’s Regulation W, which limits the transactions that banks can make to subsidiaries…. Citigroup’s work on Regulation W is unrelated to its broader effort to comply with the consent orders it was handed back in 2020….
Citigroup Repeatedly Breached Fed Rules for Interbank Loans [Bloomberg via Yahoo!]
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