By
Godfrey Benjamin
April 17th, 2024
In the United States, a client of the Bank of America was mistakenly credited with $2.45 billion only a few days after Citigroup made headlines for accidentally sending $900 million to a group of lenders.
Citi and Bank of America customers were quite surprised when they looked at their accounts. American multinational investment bank Citigroup Inc (NYSE: C) seems to be putting down its $900 million payment to lenders of the embattled cosmetics giant Revlon Inc. to one thing: human error. The bank stated that it has been in the process of upgrading its loan operations platform after a review it undertook last year and that it wrongly transferred the payments after one worker hasn’t manually selected the right system options in its loan operation software. However, companies that are now being sued to recover the money said they didn’t get any further explanation from the bank.
The dueling court filings late Monday came after Citigroup has recovered hundreds of millions of dollars, but some of the lenders are resisting and don’t want to return the payments, saying that Revlon was in default on their loans and owed them the money.
A group of lenders said in a letter to a Manhattan judge that the bank has declined their offer to conditionally return the money “in exchange for a standard indemnity Citibank would pay back the funds were it later determined that Citibank was not entitled” to them.
To elaborate; while some willingly sent back the funds, the bank has been locked in a bitter legal battle with hedge funds including Brigade Capital Management and HPS Investment Partners, which refuse to return the payments.
Surprise for Citi and Bank of America Customers
Benjamin Finestone, a lawyer for Brigade and HPS, told a judge in proceedings this week that the firms don’t concede the transfer was a mistake. Citigroup, for its part, said the funds’ actions “threaten the integrity of the administrative agency function and trust in the global banking system.”
The court placed a preliminary injunction against Brigade Capital on Tuesday, ordering it to either return the money or to not withdraw or dispose of it until a court appearance on August 31. Citibank called Brigade Capital’s actions “unconscionable” and asked the court to force the return of the money.
Be it as it may, days, after Citi made headlines for accidentally sending $900 million to a group of lenders, a Bank of America Corp (NYSE: BAC) Blaise Aguirre, its client in Massachusetts, opened his account one day in order to find that he somehow now has $2.45 billion. The thing is – money was not really there.
Bank of America spokesman Bill Halldin stated:
“This was a display error and nothing more than that. It’s been corrected.”
Aguirre stated his first thoughts were that Bank of America would realize the error itself. However, when that didn’t happen, he actually contacted his relationship manager and asked him what is the mysterious money showing up on both the web and his phone’s mobile app. And what I even more interesting, just after Bloomberg contacted bank with this inquiry, the bank realized the mistake and went on with fixing the issue with Aguirre’s Merrill Lynch account.
At Bank of America, the multibillion-dollar mishap wasn’t the first involving customer accounts. Earlier this month, the lender had a temporary display issue that caused some online and mobile banking users to see inexact balances. That mistake, however, wasn’t as potentially gainful as Aguirre’s $2.45 billion mirages: Their accounts were showing balances of $0.
Unexpected errors like these can result in major headaches for ordinary Americans, as banks typically want their money back. Depending on the state, consumers can face criminal charges if they spend money erroneously deposited in their account. One couple from Pennsylvania even faced felony theft charges last year after they spent $120,000 that their bank accidentally put in their account.