Home Finance News Citigroup fined $136 million for ongoing internal control failures by government.

Citigroup fined $136 million for ongoing internal control failures by government.

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Citigroup fined $136 million for ongoing internal control failures by government.

The latest blow to Citigroup comes in the form of a $135.6 million fine from government regulators over unresolved internal control and risk issues. Despite efforts from CEO Jane Fraser to streamline the bank and address long-standing deficiencies, the Federal Reserve and the Office of the Comptroller of the Currency found that Citigroup had not met its obligations based on a 2020 consent order. While some progress has been made, significant problems still linger, prompting the additional penalties.

The hefty fine is an additional hit to Citigroup, which had already paid a $400 million penalty in 2020 under the original consent order. Acting Comptroller of the Currency Michael J. Hsu emphasized the importance of Citibank completing its transformation and addressing deficiencies promptly. Fraser acknowledged the slow progress made by the bank, expressing confidence in ultimately achieving success in reducing risk and improving internal controls. Citigroup’s complex history of acquisitions and mergers in the 1990s and early 2000s has created challenges in integrating internal controls, leading to ongoing concerns from regulators.

Despite efforts to slim down and sell off nonessential businesses, Citigroup still faces skepticism from investors, who continue to undervalue its shares compared to other Wall Street peers. Fraser’s focus on fixing internal controls and addressing longstanding issues within the bank has been met with some success, but the lingering costs and challenges of compliance with regulatory requirements still weigh heavily on Citigroup’s reputation and financial performance. The rejection of Citigroup’s “living will” in June further underscores the need for decisive action in resolving internal control issues to regain investor confidence.

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