By Lananh Nguyen and Tatiana Bautzer
NEW YORK (Reuters) – Citigroup has struggled to adequately train employees in risk, compliance and data roles by the bank’s own assessment, shedding light on why it takes years to resolve regulatory issues, including although billions are being spent on a revision.
Citi’s analysis, some of which was seen by Reuters and previously unreported, shows the bank is facing a shortage of skilled workers, sometimes concluding it did not have the right training and assessment tools to solve its regulatory challenges. . The bank, which has operated under two regulatory reprimands in the past four years, so-called “consultant orders,” must resolve these issues before the decrees can be lifted.
For example, in one place the analysis notes “insufficient compliance risk management skills” among staff directly dealing with such issues. Parts of the analysis seen by Reuters did not address why Citi had been unable to resolve these issues. in a December 2023 spreadsheet tracking Citi’s progress on various aspects of the consent orders.
Separately, four sources familiar with the matter said the situation became further complicated when CEO Jane Fraser launched a major exercise in September 2023 to simplify the bank, lay off thousands of people and reduce the number of layers of management there.
According to the sources, some employees involved in issues related to the consent orders were also dismissed during the process.
Reuters could not independently determine whether the layoffs will hamper the bank’s overall efforts to resolve the consent orders. Without providing details, Citi denied this, saying “cherry-picking figures will paint a misleading picture.”
“We continue to invest heavily in talent and training to ensure we have the right people and expertise in critical areas such as data, risk, controls and compliance,” the bank said in a statement. She added that she proactively assesses “the evolving skillset.” necessary so that we can recruit and upgrade skills accordingly.
In response to questions from Reuters, Citi further said it has invested billions of dollars in its “transformation,” a project to address risk, controls and data management – issues raised in the 2020 consent orders from the US Federal Reserve and the Office. of the comptroller of the currency. The Reuters analysis was conducted in response to the Fed’s consent order.
Citigroup said it has deployed about 13,000 people to the project to overhaul controls and systems, with thousands of others supporting efforts across the bank. In total, the bank has approximately 229,000 employees.
The Federal Reserve and the Office of the Comptroller of the Monet declined to comment.
CEO Jane Fraser has previously said that solving Citi’s regulatory problems is a top priority. Regulators have said the bank’s widespread risks and data errors they identified speak to the bank’s financial safety and soundness. The bank was placed in criminal dock after accidentally sending nearly $900 million in its own funds to creditors of cosmetics company Revlon in August 2020.
In July, the Fed and the OCC again reprimanded and fined the bank. The OCC said Citi had “failed to make sufficient and sustained progress” in complying with its consent order. The OCC also required the company to implement a new quarterly process to ensure it was devoting sufficient resources to meet compliance milestones. By mid-July, no agreement had been reached on the plan with the regulators.
Last month, the company announced that technology head Tim Ryan would join Chief Operating Officer Anand Selvakesari in leading data management efforts.
HARD PROBLEMS
The bank’s analysis sheds light on why the problems appear to be persistent. For example, in one section the bank said that the technical skills of its staff, including in data governance – policies that describe how data is handled – needed to be improved. But then it also noted that when it came to data governance, the training program did not pay sufficient attention to “skills identified as needing improvement.”
It was also indicated that areas such as data analysis and digital literacy need improvement.
For critical compliance roles, the bank found it had not outlined the skills needed to succeed. The company also said it had not adequately assessed whether employees had the right skills for those positions.
Citi did not comment on the specific issues raised in its analysis.
CITI DISMISSAL
The sources familiar with the bank’s activities say Fraser’s dismissals led to the removal of a number of people involved in its regulatory work.
In risk management, for example, the bank laid off or reassigned 67 people out of a group of 441, according to a Citi document that lists some of the roles involved in one of the layoffs.
Some sources said the layoffs disrupted work as workers feared for their jobs and the loss of managers sometimes meant a lack of direction. But Citi disputed this view, saying it was ensuring the layoffs did not impact work on consent orders.
“The facts speak for themselves, but the selective figures will paint a misleading picture of the significant resources being devoted to this effort,” the bank said. “Our approach was disciplined and methodical, prioritizing protecting our ability to meet our regulatory obligations and accelerate this important work.”