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UPDATE 1-Citigroup sues two more Revlon lenders in $900 mln fight

(Adds details on lawsuit and background)

Aug 19 (Reuters) - Citigroup Inc is suing HPS Investment Partners and Symphony Asset Management for allegedly refusing to return a combined $237 million, escalating a legal dispute between the bank and Revlon Inc’s lenders over a loan payment error.

Citi mistakenly paid about $127.3 million in funds to lender HPS Investment and $109.7 million to Symphony, court documents showed.

The fresh lawsuit comes after Citigroup won a small victory on Tuesday in its battle to recoup nearly $900 million it mistakenly sent to creditors of troubled cosmetics company Revlon Inc.

Citi has said it quickly caught the payment error and was taking steps to recover the funds.

The error has drawn scrutiny from regulators who have begun looking into the loan and raised questions about the bank’s operational resiliency. (Reporting by Noor Zainab Hussain in Bengaluru; Editing by Anil D’Silva and Sherry Jacob-Phillips)

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