If it wasn't clear before, it seems to be now: There's little to no chance Citigroup (C 0.05%) will announce an increase to its dividend next week even though many of its closest competitors are expected to do so.

This shouldn't come as a surprise to investors who've followed the issue closely over the last few months. On a conference call in October, CEO Michael Corbat said:

I think the corporate finance math pretty clearly points you toward a preference of buyback versus dividend as your stock trades below book. And so I think that will be the first bias. But at that point, we also understand that we, to some degree, need to be mindful and over time continue to address the dividend issue. So we'll look at those trade-offs as we approach. But again, I think as has been very clearly signaled by the Fed, the bar around dividend is higher than buyback just based on the nature of what a dividend is, and so we'll have to take that into account.

But if Corbat left even the slightest opening for a dividend hike, it probably slammed shut last month with the uncovering of a $400 million fraud at Citigroup's operations in Mexico. The discovery forced the bank to restate is 2013 earnings and has called its compliance efforts into question.

"The financial impact will lower our 2013 net income by approximately $235 million," Corbat is quoted as telling employees. "The impact to our credibility is harder to calculate."

To be fair, the misstep appears to be an isolated incident. And more importantly, it's out of character with the new Citigroup that Corbat is trying to build. "So under the prior period a mistake like this would be one of many," bank analyst Mike Mayo told Bloomberg News, "whereas under the current CEO, Mike Corbat, this type of instance is more unique."

But regardless of intent, compliance issues like these could realistically cause the Federal Reserve to deny Citigroup's dividend request in the seemingly unlikely event that the bank made one. As the Fed explained in the guidance to this year's Comprehensive Capital Analysis and Review process:

Even if [a bank passes the supervisory stress test,] the Federal Reserve could nonetheless object to that [bank's] capital plan for other reasons. These reasons include: There are outstanding material unresolved supervisory issues...

We saw this come up last year with respect to BB&T (TFC 0.22%), which had its capital plans rejected after the Fed questioned how it calculated risk-weighted assets. At the time, there's was absolutely no question about BB&T's financial health. It was rather a matter of process.

So, where does this leave Citigroup shareholders? My guess is the bank has requested and will be approved for a modest share buyback program, but probably didn't request a dividend increase. It remains to be seen whether or not I'm right, but we'll know either way on March 26.