Regulators tell Citigroup to address data management issues

Citigroup has come in for criticism from banking regulators regarding “shortcomings” in its most recent resolution plan.

The Federal Reserve Board and the Federal Deposit Insurance Corporation (FDIC) said in a joint letter to Citigroup that it had identified “serious weaknesses” in its data management practices that needed to be addressed.

The issues were previously identified by the Office of the Comptroller of the Currency in a cease-and-desist order filed against Citibank in October 2020.

The regulators said the data issues “could adversely affect the firm’s ability to produce timely and accurate data and, in particular, could degrade the timeliness and accuracy of key metrics that are integral to execution of the firm’s resolution strategy”.

Acting comptroller of the currency Michael Hsu — who is also a member of the board of the FDIC — said: “Resolvability is about capabilities, not just passing a paper test. The agencies' determination regarding Citigroup reflects and reinforces this.”

In response, Citigroup said in a statement: “We are pleased that we have addressed the shortcoming identified in the 2019 Resolution Plan and we are completely committed to addressing the shortcoming identified in our July 2021 plan.”

“As part of the transformation Citi has embarked upon, we are making significant investments in our data integrity and data management, as the letter notes. We will leverage that work to remediate the shortcoming identified today, as we acknowledge there is much more work to do.”

“The result of these efforts will be more streamlined systems that improve the quality of our data as well as the speed with which it can be accessed.”

“We have a rigorous, firm-wide resolution planning process across Citi’s businesses, functions and regions. We continue to have confidence that we can be resolved without the use of taxpayer funds or an adverse systemic impact.”

Citigroup is required to publish its plan for addressing the issues by January 31, 2023.

The finding was part of the two regulators’ assessments of the resolution plans — also known as “living wills” — of the eight largest banks in the US, including Citigroup, Bank of America, BNY Mellon, Goldman Sachs, JP Morgan Chase, Morgan Stanley, State Street, and Wells Fargo.

All seven other banks received positive reviews from the regulators, with several having successfully addressed concerns raised following assessment of their 2019 resolution plans.