Skip to main content

Newsroom

March 6, 2014

Citigroup: Banamex bother

“Good news, Brady Dougan! It took a few days for dirt to kick up around another big bank, after Credit Suisse got in trouble over clients and tax evasion – but Citigroup delivered eventually. The bank said on Friday that 2013 earnings would take a retroactive hit after fraud in its prized Mexican unit, Banamex.”

“These unpleasant situations have, first, a financial cost. Banamex lent about $585m to an oil services company to finance receivables from Pemex, the state-owned oil company. According to an internal memo from Citi, it appears that the invoices from Oceanografia – processed by a Banamex employee – were falsified to show approvals from Pemex. It is unclear how many people were involved but as much as $400m was misappropriated. The fraud will reduce 2013 net profit by $235m after taxes, or 1.7 per cent to $13.7bn. (The cut in the fourth quarter is about 9 per cent.) Return on equity was thus 12 basis points lower at 6.9 per cent.”

“A few hundred million dollars does not break a bank the size of Citi. But it is not inconsequential either, given the bank’s low level of profitability (though Citi, depending on the ensuing investigation, may be able to recover some damages).”

***

Read full Financial Times article here.

In the News
Share

MEDIA REQUESTS

For media inquiries, please contact us at
press@bettermarkets.org or 202-618-6433.

Contact Us

For media inquiries, please contact press@bettermarkets.org or 202-618-6433.

To sign up for our email newsletter, please visit this page.

Name(Required)
This field is for validation purposes and should be left unchanged.

Sign Up — Stay Informed With Our Monthly Newsletter

This field is for validation purposes and should be left unchanged.

For media inquiries,

please contact press@bettermarkets.org or 202-618-6433.

Donate

Help us fight for the public interest in our financial markets, protecting Main Street from Wall Street and avoiding another costly financial collapse and economic crisis, by making a donation today.

Donate Today