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Citigroup (C) Irish Arm Under ECB Regulation Purview


Citibank Holdings Ireland, the Irish subsidiary of the Wall Street biggie, Citigroup Inc. C, will now be under the direct supervision of the European Central Bank (ECB) since Brexit. The merger with UK-based Citibank International last year helped the unit to be added in the list of large banks qualifying for ECB regulations. Notably, Citigroup is the first global lender to be on this list.

Starting 2017, ECB will regulate the Citigroup Irish subsidiary. Notably, this move will permit the bank for selling financial services across the European Union following Brexit. Therefore, Citigroup has been fortunate among global banks getting the option, which UK-based companies are looking for. Moreover, shifting assets to a Euro zone country will also allow the banks to come under ECB supervision, facilitating their business.

“This is an important milestone for Citi in Europe and we look forward to a strong engagement with the (ECB),” Citi said in a statement after passing an ECB health check earlier this month.

Further, Citigroup might have to transfer certain businesses to the EU, though not on an immediate basis. Notably, the Irish subsidiary covers only Citigroup’s retail banking operations in Europe and not its brokerage or trading businesses.

Recently, Citigroup also received the regulatory nod from the Federal Reserve to repurchase shares worth $1.75 billion. The new share repurchase program is in and above the existing $8.6 billion of buybacks announced earlier in 2016, boosting investors’ confidence on the bank.

Since the financial crisis, Citigroup’s business has been adversely affected because of pressure from regulators and market forces. The bank has cut a number of jobs and branches since 2012, when Corbat became the CEO. The recent achievement will provide some relief to investors.

Citigroup currently carries a Zacks Rank #3 (Hold).

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