Citigroup Fined $136 Million for Risk Management Failures

Regulators have imposed a $136 million fine on Citigroup for not addressing persistent shortcomings in its controls and risk management. This represents a significant setback for CEO Jane Fraser in her efforts to revitalise the major New York bank.

The Federal Reserve and the Office of the Comptroller of the Currency announced the fines just days before Citigroup’s second-quarter earnings report. The regulators highlighted Citigroup’s insufficient progress on issues first identified in a 2020 consent order, which required improvements in enterprise-wide risk management, compliance, data governance, and internal controls.

Citigroup will pay $75 million to the OCC and $60.6 million to the Fed, in addition to the $400 million previously paid under the 2020 consent order.

Fraser responded by stating that they have always said that progress wouldn’t be linear, and they have no doubt that we will be successful in getting our firm where it needs to be in terms of our transformation. She emphasised the firm’s commitment to spending whatever is necessary to address the consent orders.

Fraser, who became CEO in March 2021, is spearheading a dramatic transformation to revive Citigroup’s stock price and streamline operations. This includes focusing on multinational corporations, shedding unprofitable units, and reorganising business lines, marking the most significant change in nearly two decades.