Bank mistakes are more common than one might think. Most of them are usually tucked away in banking history due to their insignificance or quick resolution. Some, on the other hand, are too shocking, ridiculous, or downright hilarious to escape public scrutiny. These incidents, ranging from transfers made in error to an undeserved loan repayment, raise questions about the extremes of human imperfection. Here is a list of the top ten bank blunders of all time:
1. Citigroup Mistakenly Wired $900 million
CitiBank served as the intermediary between Revlon, the cosmetics company, and its creditors. The bank was obligated to repay the lenders. Instead of wiring an $8 million interest payment, Citibank repaid the entire $900 million loan in one shot. The bank lost approximately $500 million as a result of the error. It is one of the largest errors in banking history.
2. The KfW Bank transferred 5 billion euros to four other banks
In 2017, the German state-owned KfW investment bank admitted to transferring 5 billion euros to four different bank accounts. The amounts were wired due to a programming error, according to the Frankfurt-based commercial institution. Fortunately, the German bank detected the erroneous transactions and resolved them without major consequences. Despite not being financially harmed, people dubbed KfW “Germany’s dumbest bank.”
3. Japanese Town Wired US$358,000 COVID Relief to a Single Man
Abu, a Japanese town in Yamaguchi Prefecture, accidentally wired the entire COVID-19 relief fund to one man in a recent scandal. The money was supposed to be divided among 463 low-income families to help them out financially. Instead of only $774, the man’s account received the entire amount. It was even more shocking to learn that the man gambled it all away in less than a fortnight, shocking everyone.
4. Deutsche Bank Inadvertently Transferred $35 Billion
It’s still a mystery how Deutsche Bank accidentally transferred 26 billion Euros to an account at Deutsche Boerse AG’s Eurex clearing house. The error occurred a week before Easter in 2018. Fortunately, the bank recognized the mistaken transfer, corrected it quickly, and instituted preventive measures. The incident is still shrouded in mystery with Deutsche Bank keeping quiet about the whole affair.
5. PayPal Accidentally Transferred $92 Quadrillion to Chris Reynolds
Chris Reynolds, a Delaware resident, is likely still awestruck years after receiving an almost incalculable sum. The man, at that point a PayPal user for over a decade, was used to his monthly PayPal statement being under $100. You can imagine his shock when he received a whopping US$92 quadrillion in 2013. No, that isn’t an error in the text, the number is US$92 quadrillion. PayPal claimed that the erratic transfer was caused by a technical problem that was later resolved.
6. Barclays $163 Million Compensation Payout
Despite its global reputation, UK Barclays Bank made a mathematical error. A costly one that forced it to compensate its customers $163 million. Since 2008, the bank had been discharging its customers on their interest rates until it realized the error in 2013. The error may appear minor, but its magnitude is demonstrated by the fact that the financial institution eventually owed its lenders approximately $540 each.
7. AmTrust Bank Forced to Close Due to an Excess of Lending
Blunders come in a variety of forms. A blunder appeared in the form of too many mortgages for AmTrust. Its operations were too risky after customers withdrew their funds, depleting the bank’s cash reserves. It was forced to close by regulators in December 2009. The majority of its assets were purchased by the New York Community Bank.
8. Icelandic Financial Crisis
The 2008 Icelandic Banking Crisis affected the entire Icelandic financial system. Many ordinary people used Iceland accounts to save money and earn high interest rates. However, the majority of them, particularly those in the United Kingdom and the Netherlands, realized that they stood to lose millions as a result of the country’s frozen financial system. The IMF, Sweden, Denmark, Norway, and Finland had to intervene to contribute $4.6 billion to bail Iceland out of its financial crisis.
9. Alfa Bank of Russia Transfer of 10 Trillion Rubles Error
A customer of the Russian Alfa Bank discovered that the bank had transferred approximately 180 billion dollars to his account in 2014. However, he called the bank and requested that the account be blocked. The bank realized that the displayed amounts were incorrect and denied any money transfers had occurred.
10. The $613 billion debt of Lehman Brothers Bank
In 2008, it was shocking to learn that the revered Lehman Brothers bank was drowning under a $613 billion debt. The bank had been profitable since its inception in 1850 and had more than enough assets to pay off the debts, but the difficulty in selling them caused the bank’s collapse.
Final Thoughts
The ten cases listed above represent the outrageous and seemingly difficult situations that individuals, banks, and entire systems have faced as a result of errors. You may have enjoyed a good laugh, but seriously, what would you do if this happened to you?