Citi Sues Over Unreturned Funds
Shares in US banking giant Citibank Group continue to struggle to establish momentum this week despite plenty of recent headlines.
Citi, which is the third-largest bank in America, recently filed a lawsuit. They requested that the Southern District of New York Court force the Brigade Capital hedge fund to return the $176 million Citi sent to it by mistake.
In the filing sent to the court, Citi said that it had meant to send Brigade just $1.5 million. This was in order to cover the interest on a loan held by the hedge fund. The funds are part of $900 million sent in erroneous payments sent to creditors of the cosmetics company Revlon. Citi blamed this on an “operational mistake”.
In its filing to the court, Citi said:
“When Citibank discovered the mistake, it promptly asked the recipients to return its money”.
The bank was preparing to step away from its role as Revlon’s administrative agent when it accidentally sent the payments. Some of the recipients of the funds returned the money immediately. However, others, including Brigade Capital, didn’t.
Over recent months, Revlon has been embroiled in a vicious row with creditors. During the COVID-19 pandemic, the company suffered badly. Furthermore, they have recently been sued over its debt restructuring plans by a number of creditors. One of the banks acting on behalf of Brigade Capital has also filed a case against Revlon accusing it of stealing loan collateral.
Historic Chinese Banking License Granted
Away from these more embarrassing headlines, there have been some recent positive developments for Citi.
This week, the bank was granted the first license for fund custody in China to be given to a UK bank. This means that Citi can now offer its core services to global asset managers acting as a custodian bank, and holding securities, on behalf of mutual and private funds in China.
This comes at a time when China is continuing to open up its financial sector and creates huge growth potential for the bank.
The bank’s executive officer of its Chinese arm, Christine Lam, said that the company was “proud” to be granted this historic license. They applauded the “tremendous opportunities for global players to participate” in reforms.
Citi Shares Caught in Tight Range
Shares in Citi bank have flat-lined over recent months. Price is still caught between support at the 48.24 level and resistance at the 53.49 area. Price has recently broken below the rising channel low.
For now, however, while price holds above the 48.24 level, the focus remains on continued upside and an eventual continuation higher.
On the other hand, should price fall back below the 48.24 level, the 39.63 level support will be the next main downside level to note.