No more guessing. No more reading the tea leaves. It's official: On Tuesday, the Fed lifted its growth restrictions on Citigroup.
A letter from William Rutledge, executive vice president of the New York Fed, released in a regulatory filing on Tuesday, said Citigroup had made "significant progress" in implementing its new compliance risk management program.
"Consequently, the understanding that you would refrain from significant expansion is no longer in operation," Rutledge wrote in the letter, dated April 3, adding that the Fed would carefully review any future expansion proposal by Citigroup.
The article cites several analysts as stating that this action is not a signal that Citigroup will grow rapidly, although it is a "precursor to a deal." That deal is likely the acquisition of Finansbank in Turkey.
Taking the edge off the good news was word four days earlier that Citigroup is being sued in Australia for insider trading.
In Australia's first such insider trading case against a company, the Australian Securities and Investments Commission said Citigroup's wrongdoing took place while the bank was advising transport group Toll Holdings Ltd....on a $3.3 billion (A$4.6 billion) bid for rival Patrick Corp Ltd.
The bank denies any wrongdoing but faces a possible fine of $714,000 (A$1 million) as the commission plans to seek orders directing the bank to strengthen conflicts-of-interest procedures and stop it trading shares of companies it advises on deals.
It's always nice to be the first bank to do something, although you might legitimately argue that being the first company sued in Australia for insider trading is not something to highlight in the annual report. On the other hand, $1 million is chickenfeed compared to the $4.6 billion Citigroup paid to settle lawsuits over Enron, or the $10 billion in damages being sought over the failure of Parmalat.
Being a defense litigator for Citigroup has got to be the next-best-thing to an lifetime annuity.
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