Citigroup avoided one of the biggest banking mistakes in history when it credited the account of a customer with $81 trillion, instead of $280.
According to The Financial Times, the error wasn’t discovered until two employees had missed it. A third employee caught and corrected the mistake about 90 minutes after the first.
No money left the bank.
As part of the company’s internal reporting procedure, the US bank disclosed the incident with financial regulators including the Federal Reserve, the Office of the Comptroller of the Currency and the Office of the Comptroller of the Currency.
Near-impossible transactions
It is unlikely that a transaction worth $81 trillion would pass unnoticed through any bank system.
UBS compared the US stock market’s value to the global benchmarks of $62 trillion by 2024. Global wealth was estimated at $450 trillion.
In order to put the error into perspective, this amount would have allowed Elon Musk, who is the richest person in the world, to acquire his assets more than 200-fold.
Citi’s spokesperson responded to the incident by saying, “Despite that an amount of this magnitude could not have actually been paid, our detective control quickly identified the error inputting between two Citi ledger account and reversed the entry. Our preventative control would also have stopped funds from leaving the bank.”
The spokesperson said that “while there was no impact on the bank or client, this episode highlights our ongoing efforts to eliminate manual processes and automate controls through our transformative transformation.”
Citi’s costly mistakes in the past
Citigroup isn’t the only company to have made a mistake in a transaction.
The bank sent $900,000,000 to Revlon’s creditors in 2020 instead of paying a regular interest.
At first, several hedge funds including Brigade Capital Management HPS Investment Partners and Symphony Asset Management refused to refund the money, resulting in a long-running legal dispute.
Citi battled in court to recover money for over two years, but a large portion of the amount was still in dispute. It wasn’t until 2022 that a court decision allowed the bank to finally reclaim $504 million in debts.
This episode led to a number of leadership changes, such as the resignation of former CEO Michael Corbat.
Banks have also made “accidental” transfers in other instances
Citi isn’t the only bank that has blunder on money transfers.
A bank mistake in 2021 credited a Louisianan couple’s Chase account with $50 billion.
The bank took 4 days to fix the error, which made the couple the wealthiest family in the world during that time.
CNN reported that Darren James told them that the error was not a simple one-zero or two-zero error. It is more likely that someone fell asleep at the keyboard.
The post Citigroup’s $81 trillion mistake: How a ‘fat finger’ error was detected may be updated as new information becomes available
