Friday 18 April 2014

Citigroup's Irish branch fined €0.5m for reporting breach

Citibank Europe identified the problem itself
Citibank Europe identified the problem itself

THE Central Bank has fined US giant Citi more than half a million euro after it breached reporting regulations.

In a statement, the regulator said Citibank Europe Plc were in breach of how managed its liquidity risk.

Under banking regulations, banks are required to report to the Central Bank the level of assets it has that it can quickly convert to cash if need be. These “liquid assets” must be kept above a minimum level at all times.

In Citi’s case however, the Central Bank found that the firm:

• Failed to ensure the accuracy of its liquidity reporting to the Central Bank

• Failed to have “adequate internal controls in place” to ensure the accuracy of its regulatory liquidity.

• Did not apply haircuts to retail and corporate deposits to reflect the perceived risk associated with those holdings

• Included encumbered assets as part of its portfolio of readily marketable assets reported as liquid assets in returns.

Despite the issues, the Central Bank emphasised Citi remained in compliance with the minimum required liquidity ratios at all times.

This is the fourth fine for liquidity reporting the Bank has imposed since 2009.

Central Bank director of enforcement, Derville Rowland commented:  “Regulated institutions must have proper and effective systems and controls in place to ensure compliance with their regulatory reporting obligations.

“The pursuit of enforcement actions in respect of the accuracy of information submitted to the Central Bank and systems and controls failings are two of the Central Bank’s Enforcement Priorities for 2013 and, for that reason, where breaches occur in these areas, regulated entities and their management should expect vigorous investigation and follow up by the Central Bank,” she added.

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