Citi continues to work through nagging data quality issues that have drawn regulatory scrutiny and more fines this year, but the bank’s CFO said Tuesday data improvement isn’t necessarily unique to the New York City-based lender.
“I think the focus on the need to improve data as it relates to regulatory reporting is an industry dynamic, too,” Citi CFO Mark Mason said during an appearance at an annual Goldman Sachs financial services conference in New York City. “And it is a standard that continues to evolve even as we manage through our transformation, and that adds an additional layer of complexity that we can’t lose sight of.”
Citi has been working to address data, risk and control deficiencies regulators have flagged, while also going through a broader operational overhaul across the entire company, Mason said. He reiterated that that’s a multiyear journey. The bank spent $12.2 billion on technology last year alone.
Regulators hit the bank with $135.6 million in penalties in July, and the Office of the Comptroller of the Currency provided “feedback” on the bank’s endeavor to modernize its technology. Agencies have noted the company’s progress on data and regulatory reporting improvements, but also cited Citi for not being as far along as it should be in that work, Mason said.
Citi, built through numerous acquisitions over a period of years, never fully integrated systems, operations and technologies to the level that they could have been, Mason said. “And that makes what’s in front of us as it relates to this transformation an even taller order,” he said.
Mason underscored that the company’s data issues specifically relate to regulatory reporting, and that’s distinct from Citi’s customer, client and financial reporting data, which he feels “very comfortable” with.
“The work we need to do is largely around, how do we improve the timeliness and accuracy as it relates to regulatory reporting?” he said. “And there’s thousands of regulatory reports that we all have to adhere to.”
Since the July penalties – which served as an addendum to a pair of enforcement actions the Federal Reserve and OCC leveled against Citi in October 2020 – the bank has sought to examine its approach to data for regulatory reporting, “and we’re making some changes in that approach,” Mason said.
One example: “We’re going from an approach that was product-driven, in terms of how we look at improving our data, how we look at the capture of our data, how we look at the controls around that data, to one that is report-driven,” he said. “Since the ask here is around how do we improve the output of those reports, ensuring that the intake of the critical data elements is done with a lens towards what’s required on that report is an important pivot.”
More broadly, Citi is also making progress on stress testing, risk controls and platforms that support payments and markets, Mason said.
The bank continues to expect full-year expenses close to $53.8 billion, “and we’re still working to figure out if we can cover the civil money penalty,” Mason said.
Mason defended the company’s spending this year, noting the need to increase what it’s allotted to transformation and risk and control work. “We’ve been very disciplined in managing the aggregate expense pool that we have, in terms of looking for additional productivity opportunities to offset some of those increases that we saw through the year,” he added.
Mason expects 2025 to be another year of continued focus on execution of the transformation, which executives have said is their top priority.
CEO Jane Fraser has said the bank is committed to spending what’s necessary to address the consent orders. When it comes to regulatory feedback and spending, “when we fall behind in an area, we increase the investments needed,” and incorporate lessons learned, Fraser said in October.
Citi expects investment banking fees to be up 25% to 30% year over year when it reports earnings in January. This is due to strength in mergers and acquisitions, equity and debt capital markets, Mason said. The bank continues to gain share in that segment, after bringing over Vis Raghavan from JPMorgan and bolstering hiring.
