Citigroup under investigation over student-loan servicing
[NEW YORK] Citigroup Inc is being investigated over its student-loan servicing practices in a probe that the bank said echoes an enforcement action against at least one other institution.
Citigroup, which didn't disclose which regulatory agency is involved, is cooperating with the probe, the New York-based firm said Monday in a filing. The investigation may result in penalties or having the bank offer restitution to customers, Citigroup said.
Jennifer Lowney, a Citigroup spokeswoman, declined to comment beyond the filing. The bank didn't disclose the other firm it cited.
The US Consumer Financial Protection Bureau last year was involved in a similar investigation into Discover Financial Services. The Riverwoods, Illinois-based company disclosed the probe in February 2014 and last month agreed to refund US$16 million to consumers and pay a US$2.5 million penalty. The CFPB found the firm overstated minimum amounts due on billing statements and denied consumers information needed to obtain income-tax benefits.
Citigroup exited most of its student-loan business in September 2010 when the bank sold its majority stake in Student Loan Corp to Discover, unloading US$4.2 billion of private loans and US$3.4 billion of securitized loans. SLC separately agreed to sell US$28 billion of securitized federal student loans and related assets to SLM Corp, known as Sallie Mae. At the time, the bank said it would keep US$8.7 billion of federal and private loans and look to sell those over time.
BLOOMBERG
BT is now on Telegram!
For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes
Banking & Finance
Japan’s yen up sharply after hitting 34-year low against the dollar
China’s Bank of Communications Q1 profit rises 1.44%
HSBC’s private bank shuts independent asset management business in HK, Singapore
Nomura Q4 net profit jumps almost eight-fold on retail income surge
Rescue pup to meme star: the real-life ‘Dogecoin’ dog
Money laundering accused Zhang Ruijin slapped with 5 more charges days before scheduled guilty plea