Citi Hits Snag With China Plans as Regulators Flag Data Issue

Citi’s plan to expand in China has reportedly hit a regulatory bump in America.

The trouble stems from a penalty levied by the Federal Reserve against the banking giant over its data management and risk controls, Bloomberg News reported Monday (Sept. 23), citing sources familiar with the matter.

According to the report, Citi faces delays in establishing a standalone securities office because it hasn’t yet gotten a clearance letter from the Fed verifying its regulatory standing, something required by the government in Beijing.

Sources told Bloomberg Citi was ordered to resolve its data management issues after being fined $136 million this summer. They added that the situation is fluid, and that the bank was continuing its talks with China’s securities regulator.

PYMNTS is awaiting comment from a Hong Kong-based Citi spokesperson. The bank declined to comment to Bloomberg about its efforts to obtain a Chinese securities license.

Citi was issued the fine by the Federal Reserve and the Office of the Comptroller of the Currency (OCC) in July for failing to make enough progress in dealing with data management issues first identified in 2020.

As noted here at the time, the fine highlights “ongoing concerns regarding the bank’s efforts to repair data management problems and implement necessary controls to manage ongoing risks.”

It marks the latest challenge for CEO Jane Fraser as she works to rectify the bank’s regulatory failings and streamline its operations following substantial layoffs.

This penalty adds to a $400 million fine imposed on Citigroup in 2020 for “ongoing deficiencies” in its dealing with risk management and internal controls, including data quality management.

Meanwhile, PYMNTS spoke recently with Debo Sen, head of payments at Citi Services, about the state of the instant/real-time payment sector for the series, “What’s Next in Payments: The Halftime Report.”

She pointed to the rapid adoption of these new payment rails in the Asia-Pacific (APAC) region and Latin America, with India and Brazil leading the way. In India, roughly 85% of all payments are now real time, with Brazil a close second, at 80% adoption.

“The interesting thing is there is always a lot of conversation as to whether instant payments will cannibalize other methods of payment — but in fact, it is digitizing cash in those economies and eliminating cash in many cases,” Sen told PYMNTS.