JPMorgan and Citigroup close customer accounts in security crackdown By Investing.com

In a recent security measure against fraud and terrorism, JPMorgan Chase (NYSE:) & Co and Citigroup Inc (NYSE:) have abruptly closed the accounts of approximately 200 customers. This initiative, aimed at deterring criminal activities, has inadvertently ensnared legitimate clients, resulting in financial hardship and delayed access to funds. The closures have led to an increase in suspicious activity reports to the government, although few lead to law enforcement action. Amidst these closures, the US banking system has seen significant fund withdrawals.

Jerry Dubrowski of JPMorgan stated that the bank’s actions are in line with regulatory obligations and emphasized the importance of maintaining long-term client relationships. Nonetheless, there have been accusations that JPMorgan may have terminated accounts based on customers’ religious or political affiliations, a claim that the bank has not publicly addressed.

Similarly, Citibank customers have faced sudden account terminations without clear justifications. Caroline Potter, a Citibank customer, suspects her account closure is tied to her husband’s cannabis industry connections. She revealed the existence of a secretive department within Citibank that deals with such issues, though Citibank has declined to comment on individual cases.

Today, both JPMorgan Chase & Co and Citigroup Inc are facing backlash over unexpected account shutdowns. While the banks are not obliged to disclose specifics about the number of terminated accounts, about 200 ex-JPMorgan Chase clients have voiced their concerns about unexplained account terminations. These abrupt shutdowns are part of a larger security strategy but have inadvertently affected legitimate customers and businesses, leading to a lengthy fund release process post-termination.

The financial distress caused by these abrupt closures extends beyond individual customers to potentially affect related stocks like Wells Fargo & Company and Bank of America Corporation (NYSE:), as well as ETFs like Financial Select Sector SPDR Fund (NYSEARCA:XLF) and Vanguard Financials ETF (NYSEARCA:VFH). The situation highlights the delicate balance financial institutions must maintain between security measures and customer relations.

InvestingPro Insights

For investors observing these developments, it’s crucial to consider the financial performance and market standing of JPMorgan Chase & Co and Citigroup Inc. According to InvestingPro data, JPMorgan has a market cap of 423.33B USD, trades at a P/E ratio of 8.64 and has seen a revenue growth of 18.12% in the last twelve months as of Q3 2023. Citigroup, on the other hand, has a market cap of 80.54B USD, a P/E ratio of 6.58 and its revenue growth stands at 2.33% in the same period.

InvestingPro tips suggest that JPMorgan has high earnings quality with free cash flow exceeding net income and has raised its dividend for 13 consecutive years. Citigroup, meanwhile, has a declining trend in earnings per share but maintains its dividend payments for 13 consecutive years.

These insights indicate that despite the current controversy, both banks have strong financial metrics and have been rewarding their shareholders consistently. For more in-depth analysis and additional tips, consider exploring InvestingPro’s offerings, where you can find 11 more tips for JPMorgan and 12 more for Citigroup.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.