Bank Loses $500 Million It Mistakenly Transferred

source: premiumtimesng
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The bank says it will the court's ruling against it. > By Ayodeji Adegboyega Citibank, an American multinational investment bank, has lost about $500 million it mistakenly transferred to a group of companies that loaned money to embattled cosmetics firm Revlon. Being Revlon’s loan agent, the bank was meant to transfer a $7.8 million interest payment to the cosmetic company’s lenders. But in error, it transferred $893 million to the lenders last year. Some of the lenders returned about $400 million, while 10 asset managers refused to return the transferred money. The bank in August 2020 filed a lawsuit seeking the return of its funds from some of the lenders of Revlon who refused to return the money. But on Tuesday, a U.S. District Judge Jesse Furman ruled in favour of the 10 investment advisory firms that collectively received the money. Forbes reported that Mr. Furman’s ruling applied the exception of the law that generally allows a mistaken transaction to be sent back to its sender. He said New York allows recipients to keep funds if they discharge a valid debt and if the recipient is not aware of the mistake upon its receipt of the funds. In this case, he said, the payment was applied to existing loans, and the lenders did not make any misrepresentations to induce the accidental repayment. Forbes quoted Mr. Furman as saying the wire transfers were “final and complete transactions” and not subject to revocation, describing the transaction as “one of the biggest blunders in banking history”. A Citibank spokesperson told Forbes Tuesday that the bank will appeal the judgement. “We strongly disagree with this decision and intend to appeal, we believe we are entitled to the funds and will continue to pursue a complete recovery of them.” the spokesperson said.

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