Ben T. Smith IV, a longtime Silicon Valley executive and currently head of the Communications, Media and Technology practice at Kearney, speaks to Global Finance about the post-SVB venture capital industry and the pace of innovation.
Many of the world's richest countries are also the world's smallest: the pandemic and the global economic slowdown barely made a dent in their huge wealth.
Global Finance editor Andrea Fiano interviews Ásgeir Jónsson, Central Bank Governor of Iceland during Global Finance's World's Best Bank Awards at the National Press Club in Washington, DC on October 15th.
Jane Fraser, Citibank’s new CEO, was handed a tricky matter in her first days on the job. The bank is appealing a February 16 ruling by US District Judge Jesse Furman in Manhattan on an attempt to recover about half a billion dollars it had accidentally sent to Revlon lenders last year. Citi had actually sent almost $900 million in error, but some lenders returned their portion.
The transfer was made to fulfill Citi’s responsibility as loan agent to Revlon; but the bank sent over the entire loan amount, which wasn’t due until 2023, rather than just the interest owed. Citi says it was human error and, in a court filing, noted that the person who made the error failed to manually select the correct system options after some of the loan had been paid out.
Furman ruled, however, that the lenders are not required to pay back the transfer, reasoning that such a mistake had never occurred before and that it would have been “borderline irrational” for them to assume that a powerhouse like Citi would have made it.
“We strongly disagree with this decision and intend to appeal,” a spokeswoman for the bank said in a statement. “We believe we are entitled to the funds and will continue to pursue a complete recovery of them.”
Unfortunately for Citi, the payments were an exact prepayment amount “to the penny,” the judge noted, something lenders would not necessarily have believed was a mistake. A temporary ban continues on the lenders’ using the money during the appeal process.
Citi has had its share of problems with regulators recently. The bank has been upgrading its internal controls and technology since it was fined $400 million last year for failures in enterprise-wide and compliance risk management and in its data governance and internal controls. Since then, Citi has been engaged in a data architecture and IT redesign to address the problems.
It’s likely financial institutions that act as loan agents will be watching Citi’s appeal closely, as it suggests a need for stricter controls for the industry going forward.
“The industry should figure out a way of dealing with these things even if this was a black swan event,” Furman said during the trial. “Whatever my ruling is in this case, I hope the world, the market, takes notice of what’s happened here and the uncertainties that have resulted.”