Citigroup Inc (C.N) said on Monday it would speed up the transformation of its U.S. mortgage business by exiting servicing operations by the end of 2018.
Citi said it would sell its mortgage servicing rights on about 780,000 Fannie Mae and Freddie Mac loans of non-Citibank retail customers to New Residential Mortgage LLC (NRZ).
The remaining Citi-owned loans and other mortgage servicing rights not sold to NRZ are expected to be transferred to loan servicing provider Cenlar FSB [CENLR.UL] in 2018.
The lender said it expected these deals to hurt first-quarter pretax results by about $400 million, including a loss on sale and certain related transaction costs.
The move is intended to simplify CitiMortgage’s operations, reduce expenses and improve returns on capital as the company focuses on mortgage originations.
Citigroup Inc (>> Citigroup Inc) mortgage units have been fined $28.8 million for keeping home borrowers in the dark about options to avoid foreclosure and making it difficult for them to apply for relief, the U.S. consumer finance watchdog said on Monday.
CitiMortgage will pay an estimated $17 million to compensate wronged consumers, as well as a civil penalty of $3 million, the Consumer Financial Protection Bureau said. CitiFinancial Services will refund approximately $4.4 million to consumers, and pay a civil penalty of $4.4 million.
When Citigroup reported earnings on Wednesday, it announced a major milestone that its investors should cheer. The New York-based bank said that the fourth quarter of 2016 was the last time it’d separate the results from its Citi Holdings subsidiary, which was created in the wake of the financial crisis to house the bank’s toxic and noncore assets.
More than any other major bank, Citigroup found itself in the crosshairs during the crisis eight years ago. Its decision to double down on subprime mortgages on the eve of the downturn led to a $17 billion loss in the fourth quarter of 2008 alone. It followed that up with a nearly $8 billion quarterly loss a year later.
To survive, Citigroup received tens of billions of dollars’ worth of capital from the federal government, which it later had to repay by issuing new common stock and thereby diluting longtime shareholders. The net result was that, even today, its shares are down more than 90% from their pre-crisis high.
One of Citigroup’s strategies to stem the flow of losses was to quarantine the responsible assets and operations in a separate subsidiary, Citi Holdings, which it created in the second quarter of 2009. “Citicorp is our core franchise and will be the source of Citi’s long term profitability and growth,” explained former-CEO Vikram Pandit at the time. “We will manage our businesses and assets in Citi Holdings to optimize their value over time.”
At its peak, Citi Holdings administered more than $800 billion worth of assets. Considered on its own, that would make Citi Holdings the fifth largest bank in the country both now and when it was created.
Fast-forward to today, and Citigroup has whittled down the assets in Citi Holdings to $54 billion, which equates to only 3% of Citigroup’s balance sheet. Just as importantly, as Citigroup’s current CEO Michael Corbat observed in prepared remarks released Wednesday, the unit has been profitable for 10 quarters in a row.
Citigroup’s decision to shutter Citi Holdings follows on the heels of Bank of America, which responded to the crisis in a similar way. Not long after Citigroup’s decision to bifurcate its operations into good and bad banks, the North Carolina-based bank created its Legacy Assets and Servicing division to serve the same role as Citi Holdings.
Law360, New York (January 12, 2017, 3:36 PM EST) — New York Attorney General Eric Schneiderman on Thursday closed the book on a four-year investigation into a Citigroup subsidiary that revealed over 47,000 customers were overcharged by more than $22.5 million in fees on their managed investment accounts.
The agreement additionally requires the company to hand the New York attorney general’s office detailed quarterly reports on any fee overcharging issues that arise over the next three years. (AP) Citigroup Global Markets Inc. admitted in the deal that it had overcharged customers who negotiated discounted fee rates…
WASHINGTON— Citigroup Inc., Wells Fargo & Co. and Bank of America Corp. were among the banks that received the most consumer complaints filed through a federal watchdog agency in 2016, indicating that the nation’s largest banks did worse than scores of smaller banks in keeping their customers satisfied.
A new analysis of the consumer complaint database kept by the Consumer Financial Protection Bureau ranked banks by the number of complaints received so far this year, after adjusting for the size of their deposits.
At the top of the list was TCF Financial Corp., a Minnesota-based regional bank that received 12.3 complaints for each $1 billion in deposit, followed by Citigroup with 8.6 complaints and Wells Fargo with 8. SunTrust Banks Inc. and Bank of America Corp. also drew a sizable portion of complaints, 7.7 and 7.2 complaints, respectively.
[LONDON] A Citigroup Inc trader fired following global probes into foreign-exchange market manipulation said the bank turned a “blind eye” to sharing client information when it suited the business until regulators began lengthy investigations in 2013.
Traders would routinely disclose client orders to rivals and salespeople would warn preferred clients about trades before they moved markets if it benefited Citigroup, Baris Ozkaptan, who is suing the bank for unfair dismissal, said in a witness statement made public Tuesday by a London employment court.
“The bank either turned a blind eye or took very limited action, which was consistent with the general approach to sharing client information at that time,” Mr Ozkaptan said in the statement.
“If there was wrongdoing, it was not the fault of one or even some, it was in my view based on a misunderstanding, fed by a culture that applied to everyone.”