Citigroup Inc. ‘s Mexican unit, Grupo Financiero Banamex, said Monday that its first-quarter net profit will be reduced by $112 million due to reserves it has set aside to cover seemingly bad loans to Mexican oil services firms.
The cut comes on top of Citigroup’s move to reduce its fourth-quarter and full-year results by about $235 million after finding allegedly fraudulent billings at its Mexico unit.
Banamex said that the new charge is related to loans it extended to Oceanografía SA de CV, the company that Citigroup accused of fraud in February, as well as from loans to a second oil services firm that appears to have also engaged in fraud.
Citigroup disclosed earlier Monday that the second potential fraud it has uncovered involved less than $30 million in credit. The New York bank declined to reveal the name of the second company. Mexican authorities said Citigroup hasn’t yet filed charges against another oil services firm.