What Impact Will the £62m Fine on Citigroup Have on the UK Financial Industry?

UK Regulators have imposed £62M fine on Citigroup

The combined 62million fine has surfaced due to failures in trading systems , leading to stocks worth $189 billion being dumped onto the European market . The Financial Conduct Authority (FCA) imposed a fine of nearly £28 million ($36 million) on Citigroup , while the Bank of England’s Prudential Regulation Authority (PRA) fined it almost £34 million ($43 million) following investigations into the US bank.

Following probes into the failings, the regulators found that the bank's London unit, Citigroup Global Markets Limited (CGML), had a series of failings that "crystallised into trading incidents", the most striking of which was a mistaken $444 billion order in May 2022.

The regulators reduced their fines by 30% because Citigroup agreed to settle the matter. Otherwise the combined fine would have topped £88 million ($112 million).

A spokeperson from Citigroup stated the following “We are pleased to resolve this matter from more than two years ago, which arose from an individual error that was identified and corrected within minutes”

“We immediately took steps to strengthen our systems and controls, and remain committed to ensuring full regulatory compliance.”

Sam Woods CEO of the PRA said "Firms involved in trading must have effective controls in place in order to manage the risks involved,".

"CGML failed to meet the standards we expect in this area, resulting in today’s fine.

It became apparent that Citigroups compliance function were understaffed and risk controls were not being adhered to in this case. Both the Compliance and Internal Risk teams had previously “repeatedly identified weaknesses in those controls". The heavily imposed fines is a stark reminder for firms to build and maintain effcient compliance and risk frameworks.