(Reuters) – U.S. banking regulators have rejected Citigroup’s so-called “will,” a detailed plan to wind down operations in the event of a catastrophic bankruptcy, the Financial Times reported on Thursday.
At a closed meeting, a majority of the Federal Deposit Insurance Corporation’s (FDIC) five-member board of directors voted to reject Citi’s turnaround plan, calling the bank’s data controls “deficient,” according to the report.
An FDIC spokesman declined to comment on the report when contacted by Reuters.
The banking regulator’s decision reinforces its concerns about the bank’s ability to safely resolve the situation, and in particular its ongoing efforts to control data management.
“We continue to make significant investments to modernize our infrastructure, including the work we are doing to automate our data processing and regulatory reporting processes,” Citi said in a statement to Reuters.
“Our balance sheet and financial condition remain strong, with strong levels of capital, liquidity and reserves. We remain confident that the Citi issue can be resolved without the use of taxpayer funds or negative impact on the financial system.”
Citi has fought for years to allay regulators’ concerns about data management, and Reuters reported in February that it had received new guidance to fix the problems by the end of 2023.
But beyond the public shaming, the move is expected to be largely symbolic as the Federal Reserve won’t follow suit, according to one government official who asked not to be identified to discuss private regulatory talks.
By the end of this month, the Fed will publish its own analysis of the “wills” of large banks.
While the livelihood shortfall does open the door for regulators to eventually take more drastic steps, such as imposing business restrictions or ordering banks to sell certain stakes, that process only begins if both the Fed and FDIC deem the bank’s plan to be flawed.