Citigroup has been pressed by US regulators to make “urgent changes” to the way it assesses the default risk of its trading partners, according to a report by Reuters, citing an anonymous source and an email involving the bank’s internal audit unit.
According to the source, the Federal Reserve issued three notices to Citi in late 2023, ordering the bank to improve its methodology for measuring the risk of default by counterparties in derivative transactions. Reuters said the email the news agency was shown revealed that an internal audit in December found Citi’s risk management improvements across the bank inadequate and lacking in procedures to ensure comprehensive risk reporting to its board and senior management.
Meanwhile, the Office of the Comptroller of the Currency, another US banking regulator, conducted tests in September and October to evaluate Citi’s progress in rectifying data integrity deficiencies. Citi failed those tests, necessitating additional work, the source said.
The regulatory notices come as Citi continues to work through a risk management overhaul, which aims to address two prior enforcement actions issued in 2020 by the Fed and the OCC relating to deficiencies within its risk management, data governance and internal controls.
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Claudia Buch, the European Central Bank’s new top regulatory official, has warned that financial institutions need to develop more comprehensive plans detailing how they would address emerging risks.
In her first speech as chair of the ECB’s supervisory arm, she outlined a range of concerns, including Russia’s invasion of Ukraine, increased inflation, risks related to increasing cyber attacks and the impact of climate change.
“This high degree of uncertainty cannot be captured by classical risk models,” Buch said in her speech in Brussels. “A holistic view of the new risk landscape requires the use of scenarios, improvements in data and measurement, and a close interaction between bank-level and macro-level analysis.
“Banks need to be well-capitalised to deal with unforeseen events,” she added. “It is ultimately only capital that can absorb adverse shocks and allow banks to continue lending in times of stress.”
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Bank of England governor Andrew Bailey has noted signs of an “upturn” in the UK economy, despite upcoming data that could indicate the UK entered a technical recession at the end of last year.
Bailey said the bank’s forecasts pointed toward a “somewhat stronger growth story”, but noted constraints on the supply side of the economy due to trends in productivity and investment. During a speech at Loughborough University yesterday, he said that if there were two consecutive quarters of contracting GDP at the end of 2023, the decline would be “very shallow”.
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The price of bitcoin reached $50,000 on Monday for the first time since 2021, highlighting a resurgence in interest towards the token following the introduction of mainstream bitcoin investment funds earlier this year.
The cryptocurrency has gained almost 15 per cent since the start of the year, primarily influenced by the US Securities and Exchange Commission’s reversal of a decade-old policy, leading to the approval of multiple spot bitcoin exchange-traded funds, the Financial Times writes. These funds provide investors with a regulated means to gain exposure to the price of bitcoin.
Read more: Much anticipated, the US SEC approves bitcoin ETFs
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As reported by the Financial Times, HSBC will begin disclosing off-balance-sheet emissions in its annual report from this month after bowing to investor pressure for greater transparency on its financing of projects for the oil and gas industry.
Typically, banks calculate their own carbon footprint by including a portion of their clients’ emissions, based on their lending. However, this calculation often excludes emissions from capital markets transactions, such as arranging share or bond issuances.
Read more: New PCAF standard lets banks off the hook, say NGOs
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Barclays announced on Friday its intention to purchase most of the banking operations of the UK’s largest supermarket group, Tesco, in a $600mn deal. It will acquire Tesco Bank’s credit cards, loans and savings operations, adding an estimated £8.3bn in unsecured loans and around £6.7bn in deposits to its balance sheet.
Barclays and Tesco have also formed a 10-year strategic partnership that will see Barclays offer Tesco-branded banking products and services. The acquisition and partnership are expected to be completed in the second half of 2024.
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Access Bank’s CEO Herbert Wigwe, his wife, and son were among six people who died in a helicopter crash on Friday in the Californian desert. The two pilots and Bamofin Abimbola Ogunbanjo, former president of the Nigerian stock exchange, were also killed.
Wigwe was widely acknowledged as an industry leader within Africa’s banking industry, having been instrumental in transforming Access Bank from a small-scale commercial bank into one of Nigeria’s largest lenders and a regional powerhouse.
Read more: Access Holdings aims to be Africa’s gateway to the world
