Citi set free

4 Apr 2006 By Rob Cox Follow @rob1cox

The Fed says the bank made significant progress in improving risk management and is now free to return to the acquisition trail. But this may not be so easy given Citi s lowly rating, a consequence of its becoming a vast bureaucratic organisation thin on enterprise.

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Citigroup is free to return to making acquisitions because of significant progress in implementing its new compliance risk management program, according to an April 3 letter sent to Citi chief executive Charles Prince by William Rutledge, Executive Vice President of the Federal Reserve Bank of New York.

On March 16 of last year, the Fed approved Citigroup's bid to acquire First American Bank so long as it devoted "the necessary attention to implementing its [compliance risk management program] fully and effectively" and "not undertake significant expansion during the implementation period."

In the letter, Rutledge said Citigroup cleaned up its act. Consequently, the understanding that you would refrain from significant expansion is no longer in operation, he wrote.

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