The news article reports that Citigroup has been fined $135.6 million by government regulators due to ongoing internal control and risk issues. This poses a significant challenge for CEO Jane Fraser, who has been working to streamline and simplify the bank since taking on the role. Despite some progress being made, regulators found that Citigroup has not fully addressed its deficiencies, leading to additional penalties from the Federal Reserve and the Office of the Comptroller of the Currency.
In response to the fines, Fraser acknowledged that Citigroup has not made progress as quickly as desired but remains committed to transforming the bank into a less risky institution. The hefty fine comes on top of a $400 million penalty paid in 2020 when the original consent order was issued. Citigroup’s complex structure, developed through a series of acquisitions and mergers in the 1990s and early 2000s, has posed challenges in integrating internal controls and communication across the organization, leading to ongoing regulatory concerns.
Fraser has been focusing on improving internal controls at Citigroup, a task that requires significant resources and time. While some efforts, such as divesting parts of the consumer banking business, have been successful, investors still view Citigroup’s shares at a discount compared to its competitors due to the continued costs associated with addressing internal control issues. The rejection of Citigroup’s “living will” by banking regulators in June further underscores the importance of the bank’s efforts to streamline and address long-standing deficiencies.
