In a significant development, the Office of the Comptroller of the Currency (OCC) has imposed a hefty $65 million fine on Royal Bank of Canada’s American unit, City National Bank. The penalty is a result of identified gaps in the bank’s risk management and internal controls.
According to the OCC, City National Bank was found to have engaged in unsafe or unsound practices, particularly the failure to establish effective risk management and internal controls. The regulatory body issued a cease-and-desist order, mandating the bank to undertake comprehensive corrective actions to enhance its strategic plan.
City National Bank, responding to the OCC’s order, assured Reuters in a statement on Thursday morning that it is fully committed to promptly addressing the identified concerns. The statement emphasized the bank’s dedication to strengthening its infrastructure and systems to align with the scale and business model of an institution of its size.
Notably, in October, City National revealed that Royal Bank of Canada injected approximately $2.95 billion into its U.S. unit as part of management actions aimed at improving profitability. RBC has previously stated that any realized losses at City National would be absorbed at the RBC consolidated level. The recent fine underscores the regulatory scrutiny on financial institutions and the imperative for robust risk management and internal control frameworks in the banking sector.
