US regulators urge Citigroup to correct bankruptcy simulation plan

The banking supervisory authorities (FDIC) and the Federal Reserve (Fed) of the United States announced on Wednesday that they asked Citigroup to improve your bankruptcy simulation plan because it has “weaknesses”.

Under the Dodd-Frank law adopted after the 2008 financial crisis, the Fed and the FDIC are required to periodically assess bankruptcy scenarios for the eight largest banking institutions, whose bankruptcy could threaten the US financial system.

The other seven banks examined are Bank of America, Bank of New York Mellon, Goldman Sachs, JPMorgan Chase, Morgan Stanley, State Street, and Wells Fargo.

The Fed and FDIC detected in Citigroup “serious weaknesses in the bank’s data management practices” in its submitted plan for 2021.

Those shortcomings may prevent it from “producing accurate and real-time data,” potentially undermining its resolution plan, a letter from regulators to Citigroup says.

These are “weaknesses that raise questions about the viability of the plan and could lead to additional requirements if not corrected, but are not as serious as a default,” the Fed said in a statement.

Past year, Citigroup it had already been blacklisted, along with other banking institutions, for its bankruptcy scenario and had corrected the deficiencies.

The bank acknowledged in a statement on Wednesday that it “still has work to do” and announced its intention to leverage previous investments in its data management system to “address these deficiencies.”

Citigroup You must present these corrections, and the other banks their final scenarios, before January 31, 2023.

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