Citigroup fined £62mn for ‘fat-finger’ mistake; UniCredit CEO backs French president’s call for EU bank mergers
Regulators in the UK have imposed fines on Citigroup worth £62mn after failures in the bank’s trading controls allowed the mistaken sell-off of $1.4bn worth of equities in May 2022.
The Financial Conduct Authority fined the bank £27.8mn, noting that the so-called “fat finger” sale had “coincided with a material short-term drop” in a number of European indices.
Additionally the Prudential Regulatory Authority imposed a fine of £33.9mn after its own investigation found that the bank failed to meet standards relating to effective risk controls.
The penalties also related to a series of events between 2018 and 2022, of which the May 2022 incident was the most prominent.
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UniCredit CEO Andrea Orcel has backed French president Emmanuel Macron’s support for consolidation in Europe’s banking sector as part of the development of a wider capital markets union across the EU.
“It’s good to have this … commitment from a major European leader,” said Orcel in an interview with the Financial Times, noting that the further development of the EU’s banking union and capital markets union initiatives was needed to encourage large deals in the sector.
“If the rules … don’t change, no one is going to be interested beyond domestic deals [because] you can’t make synergies.”
Orcel ruled out a rumoured Unicredit bid for Société Générale.
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Bank of America is seeking to revive a lawsuit seeking more than $163mn in interest from the Internal Revenue Service in a dispute over tax liability involving mergers, including its 2013 tie-up with Merrill Lynch, Reuters reports.
In a Monday night court filing, the bank claims that a judge “rewrote” a key federal tax provision when he substantially rejected its case last year, a decision Bank of America describes as “unfair to taxpayers”.
The bank sued the IRS in North Carolina federal court in 2017, claiming it was owed tax-related interest associated with a series of mergers.
US federal law allows a taxpayer to “net”, or cancel out, interest owed on both underpayments and overpayments of taxes. A central question in Bank of America’s case is whether it was the “same” taxpayer after the mergers, making “interest netting” available.
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First Abu Dhabi Bank, the UAE’s largest lender by assets, is in advanced talks to acquire a majority stake in Turkey’s fourth-largest lender Yapı Kredi for approximately $8bn, according to Reuters.
Final details of the potential deal are being hammered out after several months of negotiations, sources told the news agency on condition of anonymity because the talks are confidential.
One source said that Turkish conglomerate Koc had sought about $8.5bn for its 61 per cent stake in the bank, with the UAE lender offering around $7.5bn.
“The bank may engage in strategic discussions on growth potential to its operational network that has a strategic fit with its overall banking operation,” FAB said in a Monday statement on the Abu Dhabi Securities Exchange.
