Snigger

NEW YORK (Reuters) – A federal judge on Tuesday said Citigroup Inc is not entitled to recoup half a billion dollars of its own money that it mistakenly wired lenders of Revlon Inc, in what he called “a banking error of perhaps unprecedented nature and magnitude.”

U.S. District Judge Jesse Furman in Manhattan said the Aug. 11, 2020, transfers were “final and complete transactions, not subject to revocation.”

The background is that Revlon – probably – cannot repay this loan/bonds. Citigroup meant to send out the interest payment – $7.8 million. Instead it sent the full loan amount, near a billion.

Oops!

And, of course, the loan payment recipients have said ta v much.

There are, it has to be said, entire departments that spend their lives sorting out oopsies in payment amounts, who they’re sent to and so on. Normally an oopsie is returned because me today, you tomorrow. But get to a large enough amount of uncertain future payment and……

12 thoughts on “Snigger”

  1. The incompetence of financial institutions never ceases to amaze. What internal controls do they have? How could an auditor ever sign off the accounts of such an institution?

  2. I know of a nearly one billion USD transfer that went to the wrong counterparty and despite being checked by three people was only noticed when the intended recipient understandably complained. I’ve also heard of another that was so humerously large, due I’m guessing to the wrong currency code, that it exceded global GDP and was deemed not to have happened

  3. There are millions of bank transfers every day. If there is one chance in a million that any one will go wrong several will go wrong every day. If there is one chance in a billion that any one will go wrong then it will happen a few times a year. if you set up systems that fewer than one in a billion will go wrong, the cost will be greater than the expected loss.
    So you only invoke systems to reduce the error rate below one in a billion for billion-dollar transfers.

  4. What amazes me is that they could make a payment out to the syndicate in excess of any amounts received from the customer, ie they are paying with the bank’s own money. Not sure that could have happened when I worked for Citi.

  5. Ummm… given early-completion conditions us Ordinary Blokes™ get to suffer…

    Shouldn’t there be a couple (tens of) milion(s) worth of penalties ?

  6. US law is different. Things like condictio non debiti and unjust enrichment simply don’t exist there. Unfair dismissal carries few sanctions and no I am not being Up The Workers here.

  7. Isn’t there a principle that if a payment is not settling a debt, it’s a gift and up to the recipient what to do with it.

  8. john77 said:
    “There are millions of bank transfers every day. If there is one chance in a million that any one will go wrong several will go wrong every day.”

    Yes, but most of those transfers are fairly small, so you’re right, it’s cheaper to allow a few mistakes. But how many a day are there in the hundreds of millions? Wouldn’t the system require additional checks at different levels?

  9. The article says that Citigroup meant to pay out interest, so presumably the billion in question was already Revlon’s money, which had been deposited at Citigroup.

  10. @ Richard T
    Yeah, I did say “So you only invoke systems to reduce the error rate below one in a billion for billion-dollar transfers.”

  11. johnnybonk “mistakenly wired lenders of Revlon”
    I take that to mean that the bank was paying meant to pay interest on behalf of Revlon to those who had lent to Revlon.

Leave a Reply

Your email address will not be published. Required fields are marked *