Citigroup


C -4.90%

had a big quarter on Wall Street, and credit costs were much lower. But that probably didn’t matter to many investors.

Instead, many Citi shareholders are focused on the bank’s regulatory woes. Beyond the $400 million penalty imposed by regulators last week, it is not yet clear how much it will cost to resolve the consent order the bank is now operating under. Among other things, the bank will need to invest substantially more in data infrastructure to help its risk management. Dealing with Washington can be costly in general, but technology upgrades at banks can be particularly drawn-out. Before the fine, Citigroup had already disclosed $1 billion in new technology investment for this year, but it hasn’t given specific further figures tied to the consent order.

Some investors might find this frustrating and give up on the stock too soon. Others might be tempted to jump back in once expenses get a bit easier to model. But maybe investors shouldn’t be so focused on expense levels or targets. Coming into the year, for example, Citi didn’t appear to be overly profligate. Its overall efficiency ratio last year—which measures expenses against revenues—at 56.5% was better than big banks overall at 57%, according to Barclays analysts’ industry figures.

Yet that wasn’t mission accomplished, as the bank still had a return-on-equity gap to peers such as JPMorgan Chase. Before the latest regulatory setback, Citigroup did appear on its way to addressing other crucial gaps and catching up to rivals’ returns, such as with a substantial share buyback program and bets on its digital retail bank.

Departing chief executive Michael Corbat told analysts on Tuesday that the bank’s focus on “reducing manual touch points, automating processes and ensuring accurate data can be accessed quickly” will also help “create a digital

WASHINGTON (Reuters) – Citigroup Inc C.N agreed to pay a $400 million penalty and draw up a sweeping remediation plan after U.S. regulators identified “several longstanding deficiencies” and operational lapses, U.S. regulators said on Wednesday.

The Federal Reserve and Office of the Comptroller of the Currency said that the bank required “comprehensive corrective actions” and must overhaul its risk management, data governance and internal controls across the company.

The Fed said the action “requires the firm to correct several longstanding deficiencies.”

“For several years, the Bank has failed to implement and maintain an enterprisewide risk management and compliance risk management program, internal controls, or a data governance program commensurate with the Bank’s size, complexity, and risk profile,” the OCC said in its consent order.

WHAT CITIGROUP’S NEW FEMALE CEO JANE FRASER MEANS FOR BUSINESS AND THE NEXT GENERATION

In a statement, Citi said it was disappointed to have fallen short of regulatory expectations and has “significant remediation projects” under way.

The hefty penalty follows renewed public and regulatory scrutiny of Citi’s operations after an “error” led the bank to mistakenly send Revlon creditors $900 million of its own funds in August. The bank is pursuing legal action against some lenders who are refusing to return the payment.

Since then it has announced that Chief Executive Mike Corbat would retire earlier than expected and the bank would boost investment in its operational systems by $1 billion.

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Incoming CEO Jane Fraser, who will take over early next year, has highlighted improving risk and control systems as a priority. “We will invest in our infrastructure, risk management and controls to ensure

Federal banking regulators have slapped Citigroup (NYSE: C) with a $400 million civil penalty for what they call its its “long-standing” failure to address and enhance firmwide controls related to compliance, data, and risk management.

The fine came from the U.S. Office of the Comptroller of the Currency (OCC), which regulates national banks. The OCC also issued a cease-and-desist order, mandating that the bank receive the OCC’s “non-objection” before making important acquisitions such as portfolio or business acquisitions. The order also gives the OCC the right to implement further restrictions or prescribe changes regarding senior management or the bank’s board.

The OCC’s order was accompanied by a separate order from the Federal Reserve that is being issued in concurrence.

Citibank

Image Source: Citigroup

Following the abrupt announcement in September that CEO Michael Corbat would retire sooner than expected, multiple media outlets reported that regulators were preparing to reprimand the bank for its failure to address long-standing issues.

The news also came after BuzzFeed dropped a big investigative report on the failure of the banking industry and regulators to prevent money laundering by criminals, terrorists, and Ponzi schemes through the global banking system.

But the last straw may have come earlier this year when Citigroup accidentally sent $900 million to several lenders of the cosmetics brand Revlon in a mistake that was ultimately caused by what the bank called a “clerical error” and “out-of-date” software.

The Fed in its order said Citigroup has failed to address issues raised in consent orders dating back to 2013 and 2015.

The bank will now have to come up with several plans for how to better manage its data, guard against risk, and improve its money laundering compliance program, among other improvements to internal controls.

The orders will likely result in more spending, adding to the

LONDON (Reuters) – Citigroup Inc

has made a strategic investment in Genesis Global Technology Limited, a London-based startup that develops technology to make it cheaper and faster for financial firms to build applications such as trading systems, the companies said on Monday.

The companies did not disclose the amount and terms of the investment.

Genesis has developed a so-called “low-code application platform”, or tools to enable banks and other financial institutions to build new software for various business lines with fewer amount of coding.

Genesis’ technology can make it on average 80% faster than building an application from scratch, said the company’s Chief Executive Stephen Murphy.

“It gives you every building block you’ll need to cover any use case that you would want to implement in the financial markets,” Murphy said in an interview.

The investment comes as banks continue to partner with young technology companies that they hope can make their IT operations more efficient and less costly. The need to automate more processes faster and keep costs in check has grown during the COVID-19 pandemic, as more bank business is now carried out remotely.

Citi backed Genesis through its Markets FinTech Investments and Sprint groups, the company said.

“The low code development as a paradigm is catching on quite quickly, it has the potential to change the way the financial industry builds applications in the future,” Nikhil Joshi, global head of spread products technology and head of markets technology for North America said in an interview.

Citi tested Genesis technology to build a proof of concept for a structured credit trading system, he said.

(Reporting by Anna Irrera; editing by Diane Craft)

Copyright 2020 Thomson Reuters.

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The Citigroup Inc. logo is displayed atop Tower 1 of Asia Square in Singapore.

Photographer: Munshi Ahmed/Bloomberg

Amazon Inc. is planning to take over some of Citigroup Inc.’s office space in Singapore at a time when a number of the e-commerce giant’s Chinese tech rivals expand in the city state.

The online retail giant will lease three floors covering about 90,000 square feet (8,360 square meters) at Asia Square Tower 1 in the heart of the financial district, according to people with knowledge of the plans. Staff will move into the new offices early next year, the people said, asking not to be identified because the plans aren’t public.

Citigroup, currently the building’s largest tenant with nine floors, is trimming its office space to better use its real estate as its 10-year lease is due to expire soon, the people said.

Read more about ByteDance’s plans here

Amazon’s plans in Singapore come as some of China’s biggest tech corporations such as Tencent Holdings Ltd., Alibaba Group Holding Ltd. and ByteDance Ltd. make the island state their beachhead for the rest of Asia. Singapore is becoming a regional base for both Western and Chinese companies because of its developed financial and legal system. It’s becoming more attractive to some as Beijing tightens its grip on Hong Kong.

Job Openings

Amazon currently has about 200 job openings in Singapore for roles covering data analytics, sales and advertising, business development, marketing and public relations, according to its career site.

A representative for Amazon declined to comment. A spokesman for Citigroup confirmed the bank is giving up the space, but declined to say which tenant is taking over. Some consumer banking staff and employees in other functions will relocate to Changi Business Park where the bank has bigger premises and