Citigroup says another bank made bigger payment error

(Reuters) — A lawyer for Citigroup Inc. told a U.S. judge on Friday he was aware of another large bank that recently made a bigger payment error than Citigroup made last August when it sent $894 million of its own money to Revlon Inc. lenders.

Neal Katyal, the lawyer, made the disclosure at a hearing in Manhattan federal court, where Citigroup urged U.S. District Judge Jesse Furman to extend a freeze on $504 million that it has been unable to recoup from the Revlon lenders.

Mr. Katyal did not identify the bank, the size of the payment error, or whether the error was fixed.

Citigroup is appealing Judge Furman's Feb. 16 decision that 10 asset managers, whose clients include Revlon lenders, could keep its mistaken payments.

Judge Furman accepted the asset managers’ argument that Citigroup, as Revlon's loan agent, paid what they were owed, and they had no reason to think a sophisticated bank would blunder so badly.

Citigroup has said the lenders received a “windfall,” and Judge Furman’s decision could steer banks away from doing wire transfers in a “finders, keepers” marketplace.

Mr. Katyal is a partner at Hogan Lovells and former Acting U.S. Solicitor General. Citigroup hired him for its appeal.