Federal Reserve warns Citi on default risk measures, Reuters reports

The Federal Reserve late last year sent Citi three notices asking for urgent changes to the way it measures default risk of its trading partners, Tatiana Bautzer, Saeed Azhar and Lananh Nguyen of Reuters report, citing a source with direct knowledge of the matter. Separately, Citi’s internal audit unit said more work was needed in at least one instance to address problems previously raised by regulators, according to an email seen by Reuters. In December, the internal audit unit found some of the work done to improve risk management across the bank to be inadequate, according to the email. The audit unit also found that Citi failed to meet a requirement that it have procedures in place to ensure the board and senior management receive comprehensive reports about risks across the company. In a statement to Reuters, Citi said meeting its regulators’ expectations was a top priority, and it was “making steady progress simplifying and modernizing our bank.” It added, “Like any multi-year effort of this scale, progress isn’t linear and there are important learnings along the way that we’re incorporating into our efforts, including in the areas of regulatory reporting, infrastructure and data enhancement.”