Prince orders Citigroup to tighten controls

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Chuck Prince, chief executive of Citigroup, has ordered staff to tighten internal controls following a series of fiascos which have landed the bank in front of regulators on three continents.

Prince has outlined a five-point plan in an internal memo to Citigroup staff which calls on the bank to strengthen internal controls, expand staff training, and improve communication and development.

Citigroup declined to comment, but insiders confirmed the content of the memo.

The UK's Financial Services Authority is still investigating Citigroup for a controversial European government bond trade.

BaFin, the German financial regulator has already recommended the Frankfurt prosecutor conduct a criminal investigation into the trades. Earlier this month Citigroup placed the traders involved on leave of absence.

Last year Citigroup's Japanese private banking arm was investigated, and subsequently had its banking licence revoked, by Japan's Financial Services Authority.

The regulator's investigation found fundamental problems with Citigroup's internal controls and governance structure at its private bank.

Under the terms of the settlement the private bank has until September 30 this year to "discontinue all banking operations" in Japan.

Last May, Citigroup said the US Securities and Exchange Commission was conducting an inquiry relating to the way in which it booked investments in Argentina, other business activities and bad loans in the fourth quarter of 2001 and the first quarter of 2002.

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