Citigroup Inc. (C:US)’s capital plan was rejected by the Federal Reserve this week in part because of weaknesses in the bank’s auditing processes, according to the Financial Times.
The central bank determined that the company didn’t make enough progress in its two-year plan to fix deficiencies cited by the Fed last year, the FT reported today, citing a person familiar with the process whom it didn’t identify.
Citigroup Chief Executive Officer Michael Corbat, 53, received mixed reviews from employees, according to the FT. One senior executive, whom the newspaper didn’t identify, said the CEO was overconfident about the progress he’d made in repairing the bank’s relationship with regulators, according to the report.
Chief Financial Officer John Gerspach and Brian Leach, head of risk, are under more pressure, according to the FT, which added that one unidentified executive said he didn’t expect anyone to lose their job.
The Fed flunked Citigroup and four other banks on March 26, blocking the company’s plan to quintuple its quarterly dividend (C:US) to 5 cents a share and repurchase as much as $6.4 billion of its stock. The shares have tumbled (C:US) 6.4 percent since the rejection, the biggest two-day slide since November 2012.
Mark Costiglio, a spokesman for New York-based Citigroup, declined to comment, as did the Fed’s Barbara Hagenbaugh.
The Fed’s decision surprised Corbat, who cut short a business trip in South Korea and returned to New York after learning about the results a day before they were released publicly, the newspaper reported on its website yesterday.
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