"While Citigroup has made considerable progress in improving its general risk-management and control practices over the past several years, its 2014 capital plan reflected a number of deficiencies in its capital planning practices, including in some areas that had been previously identified by supervisors as requiring attention, but for which there was not sufficient improvement," the Fed said.
Citi said it had requested permission for a quarterly dividend of 5 cents per share and a stock buyback program of $6.4 billion.
"Needless to say, we are deeply disappointed by the Fed's decision regarding the additional capital actions we requested," CEO Michael Corbat said in a statement, adding that the bank had not decided yet whether to resubmit the plan.
The other four banks that received objections were HSBC North America, RBS Citizens, Santander and Zions.
Immediately after the Fed announcement, Morgan Stanley said it would double its dividend and buy back $1 billion in stock.