*

UK regulators fine Citigroup ( C/PN ) 61.6 mln pounds ($78.5 mln)

for

controls failings

*

Fine one of the biggest UK sanctions for systems breaches

*

In one case Citi caused a sharp fall in European stocks

*

Citi says pleased to resolve the matter, took corrective

steps

(Adds details from regulators' statement in paragraphs 5-8,

background on Citi's risk management in paragraph 12)

By Tom Wilson

LONDON, May 22 (Reuters) - UK regulators fined Citigroup ( C/PN )

61.6 million pounds ($78.5 million) for controls failings

in its trading operations, one of the biggest sanctions for

systems breaches, which in one case saw the Wall Street firm

cause a sharp fall in European stocks.

Problems at Citigroup Global Markets Limited (CGML)

"crystallised into trading incidents" the Prudential Regulation

Authority (PRA) said in a statement on Wednesday outlining the

findings of its investigation.

The PRA and Financial Conduct Authority (FCA), the markets

watchdog, both probed and fined Citigroup ( C/PN ) over the failings that

spanned from April 2018 through May 2022.

"Firms involved in trading must have effective controls in

place in order to manage the risks involved," said Sam Woods,

CEO of the PRA and the Bank of England's deputy governor for

prudential regulation. "CGML failed to meet the standards we

expect in this area, resulting in today's fine.

Citi on May 2, 2022 processed an erroneous $444 billion

order that was meant to amount to just $58 million, prompting

$1.4 billion in mistaken sell orders, according to the

regulators' findings.

The PRA said the immediate cause of the trading error was a

trader's mistake but "primary control failings" resulted in

Citi's electronic trading system generating erroneous orders.

The regulator said that the mistake coincided "with a

material short term movement" in several European indices before

the trade was cancelled.

"In particular the absence of certain preventative hard

blocks and the inappropriate calibration of other controls" were

behind the blunder, it said.

Citi had received "repeated supervisory communication" from

the PRA to improve but weaknesses persisted, the regulator said.

A Citi spokesperson said the bank was "pleased to resolve

this matter from more than two years ago, which arose from an

individual error that was identified and corrected within

minutes."

"We immediately took steps to strengthen our systems and

controls, and remain committed to ensuring full regulatory

compliance," the spokesperson said via email.

Under CEO Jane Fraser, Citi has been seeking to address

longstanding and widespread deficiencies in its risk management,

data governance and internal controls. The failings have

prompted regulatory notices in the United States from the

Federal Reserve and the Office of the Comptroller of the

Currency.

The PRA fined Citi 33.9 million pounds for failings in its

trading systems and controls, a penalty that was reduced by 30%

after Citi agreed to resolve the issue.

The FCA said it fined Citi 27.8 million pounds.

($1 = 0.7849 pounds)