Citi will pay $135.6 million for failing to make sufficient progress toward resolving nagging data quality, risk management and internal control issues, the Office of the Comptroller of the Currency and the Federal Reserve said.
“While the bank’s board and management have made meaningful progress overall, including taking necessary steps to simplify the bank, certain persistent weaknesses remain, in particular with regard to data,” the OCC’s acting chief, Michael Hsu, said in a statement Wednesday.
The OCC accounts for $75 million of the new penalties to which Citi agreed. The Fed will receive $60.6 million, the regulators said.
Wednesday’s order “requires the bank to refocus its efforts on taking necessary corrective actions and ensuring appropriate resources are allocated for this purpose,” Hsu added, challenging Citi to “see through its transformation and fully address in a timely manner its longstanding deficiencies.”
In a statement Wednesday, Citi CEO Jane Fraser said the bank is “committed to spending what is necessary to address our consent orders” as part of its “multi-year effort” to modernize its tech.
“We’ve always said that progress wouldn’t be linear, and we have no doubt that we will be successful in getting our firm where it needs to be in terms of our Transformation,” Fraser said.
As part of the order, the OCC is requiring Citi to engage a new quarterly process to ensure it is putting enough resources toward small-step milestones, Fraser said in a memo seen by Reuters.
"Setbacks like this one today are visible and I know they can be disappointing," Fraser wrote, according to the wire service. "But they absolutely cannot distract us from the work we're doing in every corner of the bank … Efforts of this scale and importance are undeniably hard."
The action marks “a reminder that [Citi’s] work to put its regulatory issues to rest represents a marathon rather than a sprint, with bumps along the way,” Scott Siefers, an analyst at Piper Sandler, wrote in a note seen by Banking Dive.
The OCC and the Fed issued Citi a pair of enforcement actions in October 2020 to modernize the patchwork of systems that have governed the bank’s transfers of money — inherited through various acquisitions since the late 1990s. Those systems went on full display in a high-profile gaffe in which a Citi employee manually — and mistakenly — transferred $900 million of the bank’s money to creditors of the cosmetics company Revlon.
The follow-up orders comes after the Federal Reserve Bank of New York found "ongoing deficiencies" in Citi's data quality management and "ineffective compensating controls" as part of a review last year, the Fed said.
