Citi Trial Puts Banks on Notice to Ensure They’re Not Next
- Case could be ‘transformational’ for their duties, liability
- Whoever wins, $900 million fail highlights internal controls
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Win or lose, Citibank’s battle to recover half a billion dollars from an accidental payment is sure to prompt a review of internal controls in the industry and could have a lasting impact on the more than $1 trillion syndicated loan market.
In a six-day trial that wrapped up last week, Citigroup Inc.’s main banking unit laid out its case that 10 asset managers for Revlon Inc. lenders knew, or should have known, that the outsize August wire transfers were a whopping mistake. Instead of making what it says was supposed to be an interest payment as administrative agent on the loan, Citibank paid the full outstanding $900 million from its own pocket.