The bank needed to gain approval from the Fed as part of its Comprehensive Capital Analysis and Review (CCAR), an annual vetting process of the industry to ensure too-big-to-fail banks are able to weather economic stress.
By midmorning, shares had slid 4.3% to $47.99.
Citigroup planned to buyback $6.4 million worth of common stock and boost its quarterly dividends to 5 cents. Its proposed buybacks were more than fivefold the size of 2013's approved repurchase program.
"We are deeply disappointed by the Fed's decision regarding the additional capital actions we requested. The additional capital actions represented a modest level of capital return and still allowed Citi to exceed the required threshold on a quantitative basis," said CEO Michael Corbat in a statement.
The bank will now be required to submit a revised capital plan for review. The company said it has yet to determine when it will resubmit its plan.
Must Read: Warren Buffett's 10 Favorite Stocks
TheStreet Ratings team rates CITIGROUP INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate CITIGROUP INC (C) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, attractive valuation levels, increase in stock price during the past year and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow."