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Citigroup reassures regulators it is reshaping into simpler company


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Citigroup reassures regulators it is reshaping into simpler company

CitigroupInc. responded to "shortcomings" found by federalregulators in its review of the company’s 2015 "living wills"resolution plan, assuring them that the company was committed to becoming a"simpler, smaller" company that would be able to unwind successfully.

Citing the sale of OneMain Financial Holdings in and in in 2016,Citigroup claimed it had made "tangible progress" in making the companya "simpler, smaller, safer and stronger institution" through thedivestiture and sale of noncore businesses and minority investments.

As the only big bank not to have "deficiencies" inits resolution plan, Citigroup still had to defend the issues identified byregulators in order to have its plan passed as "credible."

In a letter in April, the Fed and the FDIC notedimprovements but warned Citigroup over a few "shortcomings"identified in its plan. In a response Oct. 4, Citigroup said the company hassince implemented more than 100 enhancements in its plan to address theshortcomings.

One of the enhancements, designed to addressregulators' concerns over undefined governance mechanisms, is a new triggerframework that uses defined metrics to alert senior management and the companyboard in the event of a possible bankruptcy. Citigroup also said they would beworking on the establishment of Citicorp, an intermediary holding companydesigned to handle legal concerns about the recapitalization of the company'smany subsidiaries prior to bankruptcy.

Citigroup was also criticized for a failure torealistically model derivatives markets and minimum operating liquidity neededin the event of resolution. The company reported that "substantialrefinements" had been made to its analysis of portfolio risk and businessoperations as a result.