Citi to get lower grade for its living will from the FDIC: WSJ

By Steve Gelsi

Citi is about to get the lowest possible grade on its required plan to air potential bankruptcy routes

Citigroup Inc. is about to be dinged with a lower grade from the Federal Deposit Insurance Corp. over how it handles and manages its data and risks as part of its required living-will document, The Wall Street Journal reported Tuesday.

Since the 2008 financial crisis and the Dodd-Frank legislation to shore up the U.S. banking system, big banks such as Citigroup (C) have been required to file living wills with regulators to lay out plans for an orderly bankruptcy in the event of another financial system meltdown.

Citing unnamed sources familiar with the situation, the WSJ said the FDIC's board will vote Thursday to lower its rating on Citi's living-will data management practices to a "deficiency." The previous rating was "shortcoming."

In a statement to the WSJ, Citi said it has a plan to wind down properly and that it's been making "substantial improvements" in its infrastructure.

The lower grade isn't expected to result in any fresh fines against Citi, the article said.

The Office of the Comptroller and the U.S. Federal Reserve in 2020 said they would fine Citi $400 million and issued consent orders for issues related to Citi's data and risk management.

Citi has been working to resolve those issues under Chief Executive Jane Fraser, who said in April that the bank continues to make "steady progress" on these fronts.

Citi's stock was up by 1.2% in premarket trading on Tuesday.

-Steve Gelsi

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06-18-24 0852ET

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