Citigroup Inc. (NYSE:C) has been subjected to a total of $135 million in civil money penalties as per the latest filings with the Securities and Exchange Commission (SEC). The penalties were imposed following consent orders by two major U.S. financial regulators on Wednesday.
The Board of Governors of the Federal Reserve System issued a penalty of $60,625,620 against Citigroup. Concurrently, the Office of the Comptroller of the Currency (OCC) imposed a separate $75 million penalty on Citibank, N.A., a wholly-owned subsidiary of Citigroup.
Additionally, Citibank is required to comply with an amendment to the OCC Consent Order dated October 7, 2020. This amendment stipulates that Citibank must submit a Resource Review Plan within 30 days. It also sets forth specific conditions regarding potential capital distributions from Citibank to other Citigroup entities.
The details of the consent orders and the amendment were included as exhibits in the 8-K filing, which serves as the source of this information. The financial implications for Citigroup stem from these regulatory actions, and the company has not provided any further comment on the matter as of the filing date.
The SEC filing indicates that these enforcement actions are part of ongoing regulatory oversight of Citigroup's operations by federal agencies. The bank is expected to fulfill the requirements of the amended consent order and pay the assessed penalties.
Investors and stakeholders in Citigroup are advised to review the official SEC filings for a comprehensive understanding of the events and their implications. The company's stock performance and future regulatory compliance efforts may be influenced by these developments.
In other recent news, Citigroup Inc has been hit with a $136 million fine due to unresolved data issues. The Federal Reserve and the Office of the Comptroller of the Currency imposed this fine, citing insufficient improvements in the bank's data management systems. This follows a previous $400 million fine in 2020 for similar reasons.
In a separate development, Citigroup's indicative Stress Capital Buffer (SCB) requirement has been reduced to 4.1%, down from 4.3%. This change will take effect in October 2024. The bank also plans to raise its quarterly common stock dividend from $0.53 to $0.56 per share starting in Q3 2024.
Citigroup confirmed the departure of Peter Cai, the bank's head of risk data, analytics, reporting, and technology, amid a significant reorganization effort. This comes as the bank faces regulatory scrutiny over its data management and risk control processes.
The bank is also set to earn a portion of up to $40 million in fees from advising on Hyundai Motor (OTC:HYMTF)'s upcoming IPO in India. This could significantly contribute to India's total IPO fee income.
Finally, Citigroup, along with other major U.S. banks, is expected to maintain ample capital reserves following the Federal Reserve's annual stress tests. This is despite economic and regulatory uncertainties that have led banks to be conservative with shareholder payouts.
InvestingPro Insights
Amidst the recent regulatory scrutiny, Citigroup Inc. (NYSE:C) presents a mixed financial outlook. With a market capitalization of $127.68 billion, Citigroup is a prominent player in the banking industry. Despite concerns over cash burn, as indicated by an InvestingPro Tip, the company has maintained dividend payments for 14 consecutive years, showcasing its commitment to shareholder returns. This is supported by a current dividend yield of 3.19%.
Investors may also take note of the company's stock performance, which has seen significant appreciation. With a price near its 52-week high, Citigroup has returned 52.06% to shareholders over the last year. This could be a point of interest for those looking at the company's short-term price momentum.
However, analysts have tempered expectations, with five revising their earnings downwards for the upcoming period, another InvestingPro Tip that could signal caution. For a deeper dive into Citigroup's financial health and to uncover additional InvestingPro Tips, investors can explore InvestingPro. Remember to use coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, offering even more insights to guide investment decisions.
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