Citigroup warned that more regulators are investigating the company over employee use of “unapproved messaging channels.”
Citigroup said in a quarterly regulatory filing that it is cooperating with the investigations, which it said were brought by “certain U.S. regulators and authorities.”
The firm had previously only said the U.S. Securities and Exchange Commission was conducting an investigation into the matter.
In December, the SEC and Commodity Futures Trading Commission imposed $200 million in fines on JPMorgan Chase, saying that even managing directors and other senior supervisors at the bank had skirted regulatory scrutiny by using services such as WhatsApp or personal email addresses for work-related communication. HSBC Holdings and Goldman Sachs Group have also said they’re being investigated over bankers’ misuse of alternative messaging platforms.
Separately in Monday’s filing, Citigroup warned it may be forced to continue to hold up interest payments on bonds issued by Russian companies as it seeks to keep up with ever-changing sanctions regimes around the world.
At the time of President Vladimir Putin’s invasion of Ukraine, Citigroup was serving as paying agent on roughly four dozen bonds issued by Russian corporations. That business has forced Citigroup into the spotlight in recent weeks as it held up payments to ensure compliance with U.S. and U.K. sanctions.
The company said Monday that the role poses special risks because it doesn’t always know the identity of the bondholders to whom its distributing funds. Instead, the firm is relying on international central securities depositories for information about whether bondholders face sanctions.
“To mitigate operational and sanctions risks, Citi has established policies, procedures and controls for client relationships and payment processing to help ensure compliance with U.S., U.K., EU and other jurisdictions’ sanctions laws,” the company said in the filing. “These processes may require Citi to delay or withhold the processing of payments as a result of sanctions on the bond issuer.”
Investors have spent months trying to pinpoint how Putin’s war on Ukraine will affect Citigroup, which has thousands of employees stationed across Russia. The company had been scaling back work with Russian entities weeks before the invasion, which helped trim $1.9 billion from its exposure to the country.
The company last year announced it would sell its consumer banking operations in the region as part of a push to focus more on wealth management and other higher-returning businesses. It has since broadened that exit to include commercial banking. On Monday, Citigroup said it’s in talks with a number of potential buyers for the divisions.
“Any additional financial or economic sanctions that may be implemented by the U.S., the U.K., the EU and any other jurisdictions, as well as any governmental approvals that may be required for any transaction, may cause delays or reduce the certainty of such transaction being concluded,” Citigroup said in the filing. “Such delays may be significant.”
Citigroup said its board has been receiving regular reports from senior managers across the company about the war in Ukraine, where the company has roughly 250 employees. While the company had stopped soliciting any new business in Russia, it established a new Russia Special Review Process within its reputations risk committee.
“Citi will continue to manage its existing regulatory commitments and obligations to depositors, as well as support its employees during this period,” the company said in the filing. “Citi continues to monitor the war, sanctions and economic conditions and intends to mitigate its exposures and risks as appropriate.”
