Featured Product

    PRA Fines Citigroup for Non-Compliance with Reporting Requirements

    November 26, 2019

    PRA imposed a combined financial penalty of GBP 43.9 million on Citigroup Global Markets Limited, Citibank N.A. London branch, and Citibank Europe Plc UK branch, for failings in relation to their internal controls and governance arrangements underpinning compliance with the PRA regulatory reporting requirements. Citigroup Global Markets Limited and Citibank N.A. London branch breached Fundamental Rule 6 of the PRA Rulebook while Citibank N.A. London branch and Citibank Europe Plc UK branch breached the Branch Return Rule (which was in effect from July 01, 2015). Additionally, all three firms breached Rule 6.1 of the Notifications Part of the PRA Rulebook.

    Between June 19, 2014 and December 31, 2018, or parts thereof, the firms’ UK regulatory reporting framework was not designed, implemented, or operating effectively. This led to them failing to submit complete and accurate regulatory returns to PRA. Significant errors were found in the firms’ returns, which included six substantive matters that had a material or potentially material impact on the returns. The pervasiveness of the errors and misstatements identified in the returns raised fundamental concerns about the effectiveness of Citi’s UK regulatory reporting control framework, did not provide PRA with an accurate picture of capital or liquidity position of Citigroup Global Markets Limited, and negatively impacted the ability of PRA to supervise Citi. While Citi remained in surplus to its liquidity and capital requirements at all times, the failings persisted over a significant length of time and were serious and widespread in nature. 

    The investigation of PRA focused on, liquidity returns, capital, and leverage returns of Citigroup Global Markets Limited, Citibank Europe Plc UK, and Citibank N.A. London branch returns.The investigation identified that:

    • Citi failed to ensure that systems and controls supporting its UK regulatory reporting framework were designed, implemented, and operating effectively
    • Citi failed to allocate adequate human resources to ensure that liquidity returns of Citigroup Global Markets Limited were complete and accurate
    • Citi’s documentation of multiple aspects of its UK regulatory reporting control framework was inadequate given its size, complexity, and systemic importance
    • Citigroup Global Markets Limited's approach to technical interpretations of reporting requirements was insufficiently robust, given the complexity of those decisions and the impact they could have on the accuracy of the returns
    • Citi’s oversight and governance in relation to regulatory reporting fell significantly below the standards expected of a systemically important institution

    The firms agreed to settle during the discount stage of the PRA investigation. As a result, the firms qualified for a 30% settlement discount under the PRA Settlement Policy. Were it not for this discount, PRA would have imposed a financial penalty of GBP 62.7 million on the firms.

     

    Related Links

    Keywords: Europe, UK, Banking, Citigroup, PRA Rulebook, Compliance Risk, LCR, Leverage Ratio, Regulatory Capital, Reporting, PRA

    Featured Experts
    Related Articles
    News

    EBA Clarifies Use of COVID-19-Impacted Data for IRB Credit Risk Models

    The European Banking Authority (EBA) published four draft principles to support supervisory efforts in assessing the representativeness of COVID-19-impacted data for banks using the internal ratings based (IRB) credit risk models.

    June 21, 2022 WebPage Regulatory News
    News

    EP Reaches Agreement on Corporate Sustainability Reporting Directive

    The European Council and the European Parliament (EP) reached a provisional political agreement on the Corporate Sustainability Reporting Directive (CSRD).

    June 21, 2022 WebPage Regulatory News
    News

    PRA Consults on Model Risk Management Principles for Banks

    The Prudential Regulation Authority (PRA) launched a consultation (CP6/22) that sets out proposal for a new Supervisory Statement on expectations for management of model risk by banks.

    June 21, 2022 WebPage Regulatory News
    News

    EC Regulation Amends Standards for Calculating Credit Risk Adjustments

    The European Commission (EC) published the Delegated Regulation 2022/954, which amends regulatory technical standards on specification of the calculation of specific and general credit risk adjustments.

    June 21, 2022 WebPage Regulatory News
    News

    HKMA Announces Launch of Data Repository on Sustainable Finance

    The Hong Kong Monetary Authority (HKMA) announced that the Green and Sustainable Finance (GSF) Cross-Agency Steering Group has launched the information and data repositories and outlined the progress made in advancing the development of green and sustainable finance in Hong Kong.

    June 21, 2022 WebPage Regulatory News
    News

    BIS Hub Updates Work Program for 2022, Announces New Projects

    The Bank for International Settlements (BIS) Innovation Hub updated its work program, announcing a set of projects across various centers.

    June 17, 2022 WebPage Regulatory News
    News

    EIOPA Issues Cyber Underwriting Proposal, Statement on Open Insurance

    The European Insurance and Occupational Pensions Authority (EIOPA) published two consultation papers—one on the supervisory statement on exclusions related to systemic events and the other on the supervisory statement on the management of non-affirmative cyber exposures.

    June 17, 2022 WebPage Regulatory News
    News

    NGFS Report on Integration of G-Cubed Model into NGFS Scenarios

    The Network for Greening the Financial System (NGFS) published a report that explores the feasibility of integrating the G-Cubed general equilibrium model into the NGFS suite of models.

    June 17, 2022 WebPage Regulatory News
    News

    US Senate Members Seek Details on SEC Proposed Climate Disclosure Rule

    Certain members of the U.S. Senate Committee on Banking, Housing, and Urban Affairs issued a letter to the Securities and Exchange Commission (SEC)

    June 16, 2022 WebPage Regulatory News
    News

    EIOPA Consults on Review of Securitization Framework in Solvency II

    The European Insurance and Occupational Pensions Authority (EIOPA) published a consultation paper on the advice on the review of the securitization prudential framework in Solvency II.

    June 16, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8301