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Why The Fed Rejected Citigroup's Capital Plan 

April 3, 2014
Forbes

The biggest surprise in the Federal Reserve’s Comprehensive Capital Analysis and Review results announcement this Wednesday, March 26, was the regulator’s decision to reject Citigroup’s capital plan for 2014. As a consequence, the globally diversified banking group earned the ignominy of being the only bank holding company to have its capital plan rejected on two of the four occasions the tests have been conducted. This was unexpected because of two primary reasons: Citigroup is currently the best capitalized U.S. bank in terms of Basel III readiness (something we pointed out as a part of our recent article U.S. Banks Took Big Strides Towards Basel III Compliance In 2013), and also because the bank performed better than its peers JPMorgan Chase,Bank of America, Morgan Stanley as well as Goldman Sachs in the stress tests (see Fed Stress Test For Banks: Rationale, Results & Implications). So what prompted this move by the Federal Reserve? After all, there were no hiccups in Citigroup’s plans last year as the Fed cleared its request to repurchase $1.2 billion worth of shares and to also redeem trust preferred securities (TruPS) worth about $3 billion.

Read more: Forbes

 
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