Citibank's Japan problems
Filed in archive corporate governance by leon on July 17, 2006
Certainly was the view expressed to me last night over dinner with an ex-Citigroup executive as we discussed the latest instalment on Citibank Japan's woes. "It's become too unwieldy,'' he said. Unfortunately, he didn't want to go on the record.
The topic for discussion was the biggest financial house in the Japanese market receiving a severe reprimand over a computer glitch that botched nearly 275,000 transactions in May. Some transactions were double-booked, others were processed but not reflected in statements.
The regulator, the Financial Services Agency, has ordered Citibank Japan to reevaluate and redevelop its current system of governance, internal control
and outsourcing, and to submit a business improvement plan by August 14, and then file quarterly reports starting in December outlining progress on the plan.For its part, Citibank Japan says it will try and fix the problem. "Citibank Japan regrets these issues and again apologizes to customers and all parties concerned,'' the bank said in a statement.
The problem for Citigroup is that the computer metdown followed a series of disasters in Japan.
Earlier this year, the regulator accused the company's trust banking unit of misleading inspectors with misinformation and violating accounting rules, and last year, the regulator there pulled Citigroup's private banking license and charged it with legal violations, claiming it failed to implement safeguards against money laundering and misled customers about financial risks.
All this coincides with Citigroup's governance headaches in Australia where the world's biggest bank is being sued for insider trading, something I have blogged on extensively.
The problem for Citigroup is that the computer metdown followed a series of disasters in Japan.
Earlier this year, the regulator accused the company's trust banking unit of misleading inspectors with misinformation and violating accounting rules, and last year, the regulator there pulled Citigroup's private banking license and charged it with legal violations, claiming it failed to implement safeguards against money laundering and misled customers about financial risks.
All this coincides with Citigroup's governance headaches in Australia where the world's biggest bank is being sued for insider trading, something I have blogged on extensively.
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