Citigroup facing new regulatory knock on its living will

livemint.com:

A top U.S. banking regulator is preparing to hand Citigroup a failing grade on its living-will plan, the latest rebuke for the megabank that has struggled to stay in the government’s good graces. The Federal Deposit Insurance Corp.’s five-member board intends to vote Thursday to downgrade its rating on Citi’s data-management systems to a “deficiency" from a “shortcoming," people familiar with the matter said.

The FDIC and the Federal Reserve had flagged the shortcoming in 2022 after a review of the resolution plan. The Fed isn’t expected to join the FDIC in escalating its concerns about the bank’s plan, which was first submitted in 2021, the people said. Citi said Monday it was confident in its ability to wind down properly, without the use of taxpayer funds, if needed.

“We continue to make substantial investments to modernize our infrastructure, including the work we’re doing to automate data and regulatory reporting processes," the bank said in a statement. “We have rigorous, firm-wide stress testing and resolution planning processes and we’re always working to improve and strengthen those capabilities." Big banks are required to file living wills to lay out how they would wind down their operations in the event of a debilitating financial crisis. The reports are due every other year.

Citi and its peers filed their latest plans in 2023 and are awaiting feedback. The FDIC’s issues with Citi’s systems cover some of the same ground as the consent orders the Fed and the Office of the Comptroller of the Currency issued in 2020. Regulators have been imploring the bank to address longstanding problems with the way it manages and measures its data and risks.