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Citizens Falls After Manafort Indictment Presents Regulatory Risk
Citizens Financial Group Inc. dropped as much as 5.6 percent after it was tied to a loan described in U.S. Special Counsel Robert Mueller’s indictment of U.S. President Donald Trump’s former campaign chairman, Paul Manafort.
Citizens Financial Group Inc. dropped as much as 5.6 percent after it was tied to a loan described in U.S. Special Counsel Robert Mueller’s indictment of U.S. President Donald Trump’s former campaign chairman, Paul Manafort.
A $3.4 million loan from so-called "Lender B" in the indictment matches one that Manafort took from Providence, Rhode Island-based Citizens Bank, according to public records. Investors are concerned that banking regulators could open an investigation into the firm’s bank-secrecy act and anti-money laundering compliance processes, said John Pancari, an analyst at Evercore ISI.
“The key investor concern is that such an investigation -- if it exists -- could develop into a formal regulatory consent order, which thereby could weigh on operational costs while also limiting growth,” Pancari said in a note to clients on Monday. Citizens spokesman Peter Lucht said the bank had no comment.
Citizens dropped 4.4 percent to $44.37 at 1:12 p.m. in New York, after falling as low as $43.82. The lender’s stock has climbed 4.8 percent this year, roughly matching the S&P 500 Financials Index.
Pancari said he spoke to the bank’s management and the lender reiterated confidence in its controls and procedures, while acknowledging a “rogue employee” does present a risk at any time. The firm acknowledged the investigation into Manafort but didn’t say whether the bank is a target of a separate probe, Pancari said.