Citi's new "resource review plan" implies hiring, and problems for Anand Selvakesari
Citi may be increasing market share in investment banking with fewer people than before, but it's not doing quite so well in its attempts to transform its risk, compliance and data systems.
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Speaking to Bloomberg this week, Titi Cole, the departing Citi executive who was in charge of Citi's Bora Bora program to strip out layers of management, declared that the bank was on the road to rebuilding its credibility and said she was hopeful of seeing the consent order imposed by the Office of the Comptroller of the currency, "gone" in the next five years. Two days later, the Office of the Comptroller slapped another $136m fine on Citi for failing to remediate the problem.
In its explanation of the reasons for the new fine, the comptroller's office says that:
"...for several years, the Bank failed to implement and maintain an enterprise-wide risk management and compliance risk management program, internal controls, or a data governance program commensurate with the Bank’s size, complexity, and risk profile. Such deficiencies constituted unsafe or unsound practices and contributed to violations of law or regulation."
It adds that although Citi has made an attempt to resolve the problem, it has:
"...failed to make sufficient and sustainable progress towards achieving compliance with the 2020 Consent Order."
In today's second quarter results presentation, Citi says it's already attempting to make amends and is devising a "Resource Review Plan," which is in the process of being finalised. The distinct implication is that Citi's effort to comply with the consent order may need more resources.
If it does, the man to deploy them will be Anand "Selva" Selvakesari, Citi's chief operations officer, who's been dealing with the transformation since March 2023. However, Business Insider notes that Selva already has 12,000 people working on the transformation program at considerable cost.
In a statement on the issue, Citi CEO Jane Fraser said the bank has made progress but that it hasn't made progress quickly enough in areas like "data quality management," where it's increasing its investment as a result.
It seems unfortunate, then, that Peter Cai, Citi's head of risk data analytics and reporting, who briefly had responsibility for the risk data remediation effort, left in June. The reason for Cai's exit wasn't clear, and Citi isn't commenting on the reason for his exit. Kathleen Martin, Citi's US-based interim data transformation chair, also left in January and is now bringing a lawsuit against Citi, claiming that Selva asked her to inform the board that the bank had settled its data governance goals when it hadn't. Citi is "vigorously" contesting this.
Selvakesari began his career at Citi in India in 1991 and has worked across the bank, including leading a successful transformation of the consumer division. He's on the executive team, but isn't entirely popular with some people at Citi who say the organization is political and allege that posts there have not been filled on an entirely meritocratic basis.
Citi said today that it's simplified its technology infrastructure, and has retired 300 applications year to date and over 1,000 since 2022.
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