Wednesday , December 11 2019

Citi fined $57m for inaccurate reporting

Bloomberg

Citigroup Inc was fined 44 million pounds ($57 million) by the Bank of England (BOE) for years of inaccurate reporting to regulators about the lender’s capital and liquidity levels.
Applying its largest fine ever, the central bank’s Prudential Regulation Authority (PRA) said that between June 2014 and December 2018, three UK units of the Wall Street bank had significant flaws in the systems they used to report financial information to regulators, as well as failings in internal governance. The errors had “material or potentially material impact on the returns,” according to the PRA.
The bank “failed to meet the standards of governance and oversight of regulatory reporting which we expect of a systemically important bank,” Sam Woods, deputy governor for prudential regulation and chief executive officer of the PRA, said in a statement.
The problems occurred at some of the bank’s most important units in the world, including Citigroup Global Markets Ltd, or CGML, which is the hub of the firm’s non-US trading and deal-making operations. The London-based entity had hundreds of billions of dollars of assets at the end of last year, according to a regulatory filing, enough to make it one of Europe’s biggest investment banks on a standalone basis.
According to the PRA, the bank’s units relied heavily on employees in Budapest and Mumbai to prepare the reporting, even though London-based regulatory teams had ultimate responsibility for validating and signing off on the reports. The bank’s own management control assessments said these teams required “very close monitoring.”

Wrong Currencies
Among the problems cited by the PRA: Reports were often prepared manually; there were persistent questions over the quality of the data used; the bank’s systems used the wrong currency for settlement of some positions; and there was a heavy reliance on a single individual in Budapest to handle some of the reports.

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