Citibank says it will appeal a federal judge’s Tuesday ruling that it is not entitled to recover about $500 million that it mistakenly wired to creditors on behalf of Revlon, CNN reports. Citibank, acting as Revlon’s loan agent, intended to send interest payments totaling about $8 million to the cosmetic company's lenders in August, per the Wall Street Journal. However, in what Judge Jesse Furman of US District Court in New York calls "one of the biggest blunders in banking history," Citibank wired nearly $900 million of its own money to the creditors. "The resulting payments equaled—to the penny—the amounts of principal and interest that Revlon owed on the loan to its lenders," Furman notes in his ruling. Typically, recipients of accidental deposits are required to return the money, per CNN.
In this case, though, Furman found that the lenders who received the payments reasonably believed that Citibank was repaying the loans and did not suspect the money was sent in error. "To believe that Citibank, one of the most sophisticated financial institutions in the world, had made a mistake that had never happened before, to the tune of nearly $1 billion, would have been borderline irrational," Furman writes. Citibank, which has blamed the mistake on human error, was able to claw back about $385 million, per the Journal. But other lenders refused requests for repayment from the bank. In addition to human error, wonky banking software with a poor user interface contributed to the mistake, per ars technica, which outlines the steps that led up to the error. With an appeal on the horizon, Furman kept a temporary restraining order on the funds in place to prevent the lenders from using it, the New York Times reports. (More Citibank stories.)
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