The key to Citigroup's regulatory woes: the need to “upskill” its world news staff

For example, in one place the analysis found “inadequate compliance risk management skills among employees directly dealing with such issues.” The part of the analysis seen by Reuters did not indicate the reasons why the City was unable to solve these problems.

These were presented in a spreadsheet in December 2023 tracking Citi's progress on various aspects of the compliance order.

Separately, four sources familiar with the matter said the situation became more complicated when CEO Jane Fraser launched a massive move to simplify the bank in September 2023, laying off thousands of people and reducing the number of layers of management within it.

According to sources, some of the staff involved in matters relating to the consent order were also dismissed during this process.

Reuters was unable to independently determine whether the layoffs undermined the bank's overall efforts to resolve the compliance orders.

Without providing details, the city denied this, saying “selective numbers would paint a misleading picture.”

“We continue to invest heavily in talent and training to ensure we have the right people and skills in key areas such as data, risk, control and compliance,” the bank said in a statement. She added that she is actively assessing “the skills we need to develop so that we can recruit” and upskilling accordingly.

In response to questions from Reuters, Citi also said it had invested billions of dollars in a project “transformation” to address risk, control and data management issues raised by the U.S. Federal Reserve following its compliance order. for 2020. Currency Controller. The analysis seen by Reuters was conducted in response to the Fed's approval.

Citigroup said about 13,000 people were involved in the project to modernize controls and systems, with thousands more supporting efforts across the bank. The bank employs a total of approximately 229,000 employees.

The Federal Reserve and the Office of the Comptroller of the Currency declined to comment.

Chief executive Jane Fraser has previously said that resolving CITIS's regulatory issues is a top priority. Regulators said they had identified widespread risks and data errors at the bank that impacted its security and financial soundness. The bank was sent to prison in August 2020 after it mistakenly sent nearly $900 million of its own funds to creditors of cosmetics company Revlon.

In July, the Fed and OCC again reprimanded and fined the bank. The OCC found that the city had not made significant and sustained progress in complying with the compliance order.

It also required the OCC to introduce a new quarterly process to ensure that sufficient resources were allocated to achieving key compliance milestones. As of mid-July, the plan had not been agreed to by regulators.

Last month, the company announced that its chief technology officer Tim Ryan would take over data management responsibilities alongside chief operating officer Anand Selvakesari.

A difficult problem

The Bank's analysis sheds light on why these issues prove so complex. For example, in one section, the bank stated that it needed to improve the technical skills of its employees, including data management – the policies that define how data is managed. However, it also noted that when it came to data management, its training program did not adequately address “skills identified as requiring improvement.” He highlighted areas such as data analysis and digital literacy as requiring improvement.

In terms of its key role in compliance, the bank said it had not identified the skills needed for success. It was also found that there was no adequate assessment of whether employees had the right skill set to perform these functions.

The city did not comment on specific issues raised in the analysis.

CITI limitations

Sources familiar with the bank's operations say Fraser's dismissal resulted in the removal of some people involved in regulatory work.

In the risk management area, for example, the bank laid off or rehired 67 people out of a group of 441, according to a Citi document detailing the roles affected by the round of layoffs.

Some sources say layoffs have disrupted work as workers fear for their jobs and the loss of managers sometimes means a lack of guidance. However, the city disputed this view, saying the consent order did not allow the layoffs to affect work.

“The data speaks for itself, but selective numbers would paint a misleading picture of the significant resources devoted to this effort,” the bank said. “Our approach has been disciplined and methodical, and our priority has been to protect our ability to meet our regulatory obligations and accelerate this important work.”