Citigroup Inc. (C) is close to a secret deal with the Federal Deposit Insurance Corp. that will increase scrutiny of the bank and force it to resolve managerial, financial and governance issues, according to media reports on Wednesday. The deal, which highlights concern over the bank's financial health and governance, could be finalized soon.
The agreement, under increased pressure from the regulator, requires that Citigroup strengthen its board and governance, improve asset quality, manage expenses better and provide additonal information to regulators on its capital and liquidity.
The Federal Deposit Insurance Corp. or FDIC is known to be frustrated with the slow pace of sale of Citigroup's toxic assets, its losses and the lack of commercial banking experience at the top.
Citigroup had struck a similar deal with another regulator, the Office of the Comptroller of the Currency, in late 2008, reports said. Such deals between regulators and a bank, known as "informal actions", are not made public to avoid stoking investors' fears. These informal actions can be in the form a memorandum of understanding or a commitment letter from the bank to the regulators.
In order to address regulators' concerns, Citigroup has hired five new directors, bolstered its balance sheet and hired executives with commercial banking experience. The bank has also agreed to sell non-core businesses.
Citigroup is among the banks that has been hit hard by the credit crisis and ongoing recession. The company has has lost $36 billion over six quarters and received $45 billion in bailout funding from the U.S. government. Citigroup was replaced in the Dow Jones Industrial Average on June 1 by Travelers Companies Inc. (TRV), which was spun off from the company in 2002. Citigroup had joined the Dow in March 1997 as Citicorp.
Last week, Citigroup announced a major reshuffling of its top management, shunting out its chief financial officer to a role heading strategy and hiring a top banker to head its main banking subsidiary. Edward Kelly, appointed CFO in March after Gary Crittenden stepped down, will look after Citigroup's strategic and operational priorities, including mergers and acquisitions,and will become Vice Chairman of the New York-based company. promoted its comptroller and chief accounting officer, John Gerspach, to succeed Kelly as CFO. Gerspach has served at Citigroup since 1990.
In January, Citigroup reorganized itself into two operating units, Citicorp for its retail and investment banking business, and Citi Holdings for its brokerage and asset management.
Citigroup is slated to report its financial results for the second quarter on Friday. Analysts expect the company to report a loss of $0.31 per share on revenues of $22.36 billion for the quarter.
C closed Wednesday's regular trading session at $3.17, up $0.25 or 8.56% on a volume of 388.01 million shares.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.