City National Bank was fined $65 million by federal regulators Wednesday for failing to maintain adequate risk management and internal controls, including those related to money laundering.
The bank, long known as L.A.’s “Bank to the Stars” for its close ties to the entertainment industry, has entered into a civil consent order with the Office of the Comptroller of the Currency to liquidate. What regulators called “Systemic deficiencies in bank risk management and internal controls.”
The Los Angeles-based bank, the largest, did not confirm or deny the regulator’s findings. The company issued a statement saying it plans to address the issue.
“City National and our new management team are committed to resolving the issues identified in the OCC order as quickly as possible. We are strengthening our infrastructure and systems to reflect our size and business model. At the same time, we remain focused on providing consistently superior banking products and services to our customers,” City National’s Diana Rodriguez said in a statement. Chief Communications Officer.
The consent order requires the bank to establish a compliance committee consisting of at least three members, a majority of whom are not directors, officers, or employees of the bank or its subsidiaries or affiliates. In that case, the committee would need to monitor the bank’s efforts to correct the deficiencies.
City National is Management changed in November. Chief Executive Officer Kelly Coffey was replaced as CEO by Howard Hammond, a veteran executive at Fifth Third Bancorp in Cincinnati. Coffey, who had been running the bank since 2019, has moved to head the City National Entertainment division, which serves clients across the industry.
Last year, City National was sued by the U.S. Department of Justice, accusing it of violating Los Angeles County’s federal housing and banking discrimination laws by avoiding lending to homebuyers in predominantly Black and Latino neighborhoods. Paid $31 million in settlement.
City National denied violating discrimination laws but said it wanted to avoid protracted litigation. Under the settlement, a number of measures were agreed to to expand financing to ethnic minorities.
Founded in Beverly Hills in 1954, City National has grown significantly since being acquired in 2015 by Royal Bank of Canada, which coveted its wealthy customer base, long history and profits.
However, RBC, Canada’s largest bank, Had to inject at least $2.95 billion The main reason for transferring the stock to City National last year was the huge unrealized losses on City National’s bonds. Last year’s rapid rise in interest rates caused the value of bank securities to fall and was a key factor in the crisis that led to the failure of several banks.
RBC said in a statement Wednesday that it is focused on addressing City National Bank’s “risk management capabilities” following “significant growth in trading volumes over the years.”
“City National’s customer franchise and long-term potential are very strong, and we are confident that this U.S. platform will achieve long-term and sustainable success,” said RBC Global Sanam Haidari, head of communications, said in a statement.
