United States: a clerical error costs the American bank Citigroup dear
The Citigroup bank (photo) has so far recovered only $ 400 million, and is now fighting against ten investment funds that refuse to repay.
AFP / Archives
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3 min
Pressing the send key can turn into a nightmare… The big American bank Citigroup is paying the price.
She loses a judgment of $ 500 million mistakenly paid to investment funds.
In August 2020, the bank made the blunder of transferring $ 900 million to several creditors.
A New York judge has just estimated that they are not obliged to reimburse the sums illegitimately received.
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The clerical error concerns a $ 900 million loan, granted to cosmetics maker Revlon, for the 2016 takeover of competitor Elizabeth Arden.
The Citigroup bank, which manages this loan, mistakenly paid the creditors the entire loan.
In reality, the bank just wanted to pay them on interest profit in the amount of $ 7.8 million.
Blunder
Citigroup, which quickly noticed its blunder, asked the beneficiaries to reimburse the sums collected.
The bank has, for the moment, recovered only 400 million dollars, and is fighting today against ten investment funds which refuse to do so.
The latter say they are in good faith, convinced that these amounts correspond to an early repayment of their loan.
Contrary to American law which pleads for a refund of sums wrongly collected, the New York court, where Revlon's headquarters resides, rules that the beneficiary of an accounting error can keep the money provided he does not failed to provide false information and was not immediately informed by the sender of the error.
Hard blow
Citigroup, which intends to recover the missing 500 million, must appeal.
The verdict is a blow to the bank, which was fined four months ago by the US authorities four months ago, accusing it of flaws in its risk management.
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To read also: Despite the pandemic, American banks post insolent results
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