In the summer of 2020, Citibank mistakenly transferred $900 million to creditors, not everyone agreed to return the money, and the court supported them.
American banks have begun to include in loan agreements a condition for the return of money transferred by mistake, Bloomberg reports. Citigroup, Barclays and Jefferies Financial Group have already done so, according to sources familiar with the matter.
The documents mention “Revlon clawback”, the newspaper writes. The wording may vary, but it usually gives the agent bank the “sole” right to determine when a creditor’s payment has been made in error and to establish a refund procedure.
Representatives for Citigroup and Barclays declined to comment, and Jefferies did not immediately respond to a request for comment.
Banks began to include a new condition in the contracts after the dispute between Citibank and Revlon. The bank was acting as a loan agent for a cosmetics company and was going to send about $7.8 million in interest payments to creditors.
However, Citibank accidentally repaid the principal amount of the loan. After the mistake, some creditors sent money, but the bank never received back $500 million. The company sued, but it ruled in February 2021 that Citibank was not entitled to a refund