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Citi fined £44m by UK watchdog for 'serious' failings

·Senior City Correspondent, Yahoo Finance UK
General view of Canary Wharf at peak hour in London on October 31, 2017. Several bank groups, like HSBC and Citigroup, threaten to leave the financial district of Canary Wharf and the City. (Photo by Alberto Pezzali/NurPhoto via Getty Images)
Citi's London headquarters in Canary Wharf. Photo: Alberto Pezzali/NurPhoto via Getty

American bank Citi (C) has been fined £44m by the UK’s financial watchdog for past errors made in submissions to the regulator about its financial health.

The Bank of England’s Prudential Regulation Authority (PRA) on Tuesday announced it fined three of Citi’s European operations a collective £44m, the regulator’s largest ever fine. The PRA cited “serious and widespread” failing in Citi’s reporting to the watchdog.

“Between 19 June 2014 and 31 December 2018, or parts thereof, the firms’ UK regulatory reporting framework was not designed, implemented or operating effectively,” the PRA said. “This led to them failing to submit complete and accurate regulatory returns to the PRA.”

The failings related to legally required reports on capital — the value of financial assets held by the bank — and liquidity — the speed at which the bank could offload those assets if needed. Banks are legally required to provide regular updates on these measures and must maintain minimum standards to ensure they can survive should any financial shocks occur.

While Citi hit capital and liquidity goals at all times, the errors in the forms were not acceptable given the bank’s central importance in the global financial system. The PRA said its ability to regulate the bank was also hit by the poor reporting.

“The pervasiveness of the errors and misstatements identified in the firm’s returns raised fundamental concerns about the effectiveness of Citi’s UK regulatory reporting control framework,” the PRA said.

Edwina Frawley-Gangahar, a spokesperson for Citi, said the bank had “fully remediated” the historic issues and had “cooperated fully with the PRA throughout the process.” The PRA said Citi would have been fined £62.7m for the failings but a 30% discount was applied to reflect the bank’s cooperation.

“Citi places a high priority on meeting its regulatory reporting requirements, and has devoted significant resources to UK financial reporting before, during and after the period to which the PRA's notice relates,” Frawley-Gangahar said in a statement.

“The PRA acknowledges that Citi has made substantial strategic enhancements to its regulatory reporting infrastructure in the UK, and has also conducted a review of the systems and controls underpinning its regulatory reporting framework.”