Banking

Citigroup unexpectedly lost a legal battle to recover half a billion dollars it sent Revlon lenders, after the embarrassing blunder forced it to answer to regulators and tighten its internal controls.

Deals, trends and research in structured finance and asset-backed securities for the week of Feb. 5-11

Opportunity Financial, which offers consumer installment loans in partnership with banks, is merging with FG New America Acquisition Corp., a special-purpose acquisition corporation. The deal is expected to close in the second quarter.

The eight-year-old finance company closed on its fourth overall securitization, in what was its largest ABS bond issuance to date.

Gains in consumer financial stability helped to decrease the rates of distressed home loans, but job creation is needed to make recovery sustainable, a CoreLogic report found.

The biggest U.S. banks reduced the portion of their collective balance sheets they’re dedicating to loans to a new low, extending a trend that’s seen the largest lenders put less and less of their firepower behind everyday borrowers.

The rise in sales comes as risk premiums for new transactions have tightened to pre-pandemic levels, marking a stark turnaround in a sector with heavy exposure to company bankruptcies caused by the lockdowns.

Acting Director Dave Uejio wrote in a blog post that the Consumer Financial Protection Bureau needs more time to consider rules that were finalized under the Trump administration but have not yet gone into effect.

The proposed securitization launches the same week the Federal Reserve lifted a three-year-old enforcement action against the auto lender over its prior risk compliance oversight policies.

However, the share of new impairments increased, likely as a result of the high concentration of these loans given to self-employed borrowers.