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Thu, May 11, 2006 - Page 10 News List

Computer snafu hurts Citibank Japan

AP , TOKYO

A computer problem at Citibank branches in Japan botched 274,800 bank transactions over the past week, the latest in a string of embarrassments for the largest US financial house in the Japanese market.

The glitch affected transactions from May 2 to Monday, and the problem was fixed by early yesterday morning, a Citibank spokeswoman said on condition of anonymity citing company policy.

Some transactions were double-booked, while others were processed but not reflected in statements. The spokeswoman could not give a monetary figure for the total amount.

"Citibank Japan deeply regrets that this incident has occurred," Citibank, a unit of Citigroup Inc, the world's largest bank, said in a statement. "The bank is taking necessary measures to prevent future occurrence."

The problem affected yen savings accounts, US dollar savings accounts, checking accounts, international loan cards and money advances. Citibank said the mishap was caused by errors in a new computer system that occurred despite testing.

Citibank is struggling to polish an image tarnished by a series of reprimands by regulators in Japan.

Just last month, Japan's Financial Services Agency (FSA) accused Citigroup's Japanese trust banking unit of misleading inspectors with misinformation and violating accounting rules, and ordered it to halt all new operations on May 2.

That followed the FSA's decision last September to pull Citigroup's private banking license and charge the company with legal violations. In that case, the FSA said the private bank failed to implement safeguards against money laundering and misled customers about financial risks.

And last November, Douglas Peterson, Citibank Japan's new chief executive, apologized at a parliamentary committee and said 14 officers have been fired, including eight managing directors, for their dubious actions.

In last month's reprimand against the trust bank, Cititrust and Banking Corp, the FSA said the company violated Japanese laws regulating the control, settlement and clearing of trust assets, employees' tax refunds, mutual fund sales and other transactions.

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