Citigroup said on Friday that after a U.S. federal judge ruled that it has no right to recover funds that were mistakenly transferred to Revlon’s lenders last year, it recorded an additional $390 million in operating expenses in the fourth quarter of 2020.
As a result, Citigroup cut its fourth-quarter earnings from $2.08 to $1.92 per share.
CITIGROUP’s “failure” was cut by the CEO’s salary because he went to the exit
In August, a “business error”
So far, $389.8 million has been repaid at the bank’s request, but some lenders still insist on using these funds, leading the bank to a legal battle with a group of hedge funds to recover the remaining funds.
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This month, Jesse Furman of the U.S. District Court in Manhattan stated that the transfer was a complete transaction that did not need to be reversed and refused to force the defendant to return the funds. Citigroup is planning to make a decision on this.
Chief Financial Officer Mark Mason said at an industry conference on Thursday: “I do believe that we have a good reason for appeal and we will continue to do so.”
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The unprecedented error is the latest error in Citigroup’s internal control. Due to long-standing flaws, federal regulators imposed a fine of $400 million on Citigroup in October.
The lack of internal control at Citigroup is a factor in the early retirement of CEO Mike Corbat this month.
Jane Fraser will take over from the company on Monday.