(Bloomberg) — Citigroup Inc. is working to fix compliance issues linked to rules that protect customers’ insured deposits, according to a person familiar with the matter.
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The bank repeatedly breached the Federal Reserve’s Regulation W, which limits the transactions that banks can make to subsidiaries, Reuters reported Wednesday, citing an internal company document.
“We are fully committed to complying with laws and regulations and have a strong Regulation W framework in place to ensure prompt identification, escalation and remediation of issues in a timely manner,” a spokeswoman for Citigroup said in an emailed statement.
The breaches are the latest sign that Chief Executive Officer Jane Fraser’s turnaround of the bank won’t be as straightforward as investors once hoped. That effort — which is partly in response to a pair of consent orders it was saddled with by the Fed and the Office of the Comptroller of the Currency in 2020 — has been hamstrung at times by regulatory issues and other operational missteps by Citigroup.
Citigroup earlier this month agreed to pay almost $136 million in fines to bank regulators for making “insufficient progress” on resolving those orders. The bank now has to complete a resource review plan for the OCC, which may require it to hire more staffers or invest in new technologies to ensure it’s on track to fulfill the requirements in the original consent orders.
Last month, the lender and three of its rivals were ordered to improve their blueprints for a hypothetical wind-down after top US regulators found weaknesses in their plans.
Shares of Citigroup were little changed at 8:44 a.m. in early New York trading.
Citigroup’s work on Regulation W is unrelated to its broader effort to comply with the consent orders it was handed back in 2020, the person familiar with the matter said, asking not to be identified discussing non-public information.
Fraser has previously said addressing those orders is her primary focus as CEO, even as she acknowledged that the company had fallen behind on beefing up its systems for data-quality management.
“We’ve been public this year about the fact that we were behind in this particular area and that we had increased our investment as a result,” Fraser told analysts earlier this month. “Addressing these areas is the primary goal of our transformation, our No. 1 priority.”
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