(Reuters) – The Federal Deposit Insurance Corp.’s five-member board plans to vote on Thursday to downgrade Citigroup’s data management systems from “underperform” to “underperform,” a government official familiar with the matter said.
The US Federal Reserve and FDIC in 2022 identified a flaw in Citi’s so-called will, which details how the firm would be dissolved in the event of bankruptcy. If those concerns escalate into a “flaw,” it could set the ball rolling for regulators to order the bank to make changes to its operations if the Fed and FDIC agree.
However, the Fed is not expected to join the FDIC in raising concerns about the bank’s plan, the official said. The Wall Street Journal first reported the move.
Representatives for the Fed and FDIC declined to comment.
Banking regulators said problems with Citi’s data management could negatively impact its ability to provide timely and accurate data during a period of financial stress and advised the bank to take urgent action to correct its resolution plan.
“We have rigorous stress testing and decision planning processes across the company, and we are always working to improve and strengthen these capabilities,” Citi said in a statement.
“Our balance sheet and financial condition remain strong, with strong levels of capital, liquidity and reserves. We remain confident that Citi’s issue can be resolved without using taxpayer funds or negatively impacting the financial system,” the bank said.