Citigroup’s Mexico Unit Fined $2.2 Million Over Loan Controls

October 16, 2014

10/15/14 Bloomberg

finance-market_dataCitigroup Inc. (C)’s Mexico subsidiary was fined 30 million pesos ($2.2 million) by the nation’s bank regulators, which faulted the firm for inadequate controls and making loans that violated lending rules. The regulator known as the CNBV announced the penalty in an e-mailed statement today. Banamex said in a separate statement that it paid the sanction and is working on corrective measures. Citigroup, the third-largest U.S. bank, said in February that it had discovered the Banamex unit had made bogus loans to Oceanografia, forcing the New York-based company to cut previously reported earnings for 2013 by $235 million. Banamex had advanced funds to Oceanografia secured by promises that state-run Petroleos Mexicanos would repay the bank for work the oil-services firm performed.

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UPDATE 2-Banamex uncovers new $15 mln fraud in Mexican bank unit

October 16, 2014

10/14/14 Reuters

citigroupCitigroup Inc said on Tuesday it had uncovered a $15 million fraud at its troubled Mexican unit Banamex related to a security services company the bank operated. The company was originally set up only to protect Banamex board members and their families from kidnappers and other attackers, a person familiar with the investigation said. Citi said the company was also found to have been offering its services to third parties. The fraud was related to expenses claims submitted by the company to the bank, the person added.

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Citi’s consumer banking head plans to leave: WSJ

October 15, 2014

10/14/14 Reuters

citigroupManuel Medina-Mora, head of Citigroup Inc’s (C.N) consumer banking and chairman of the company’s troubled Mexico unit, is preparing to leave in the coming months, the Wall Street Journal reported, citing people with knowledge of the situation. Details of Medina-Mora’s departure were not finalized and could change, but he is expected to leave or announce his departure by early next year, the Journal reported.

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Oceanografia Mediator Said to Deny Some Citigroup Claims

October 14, 2014

10/13/14 Bloomberg

The Mexican mediator in oil-services company Oceanografia SA’s bankruptcy has rejected at least 2 billion pesos ($150 million) of claims sought by Citigroup Inc. (C), said a person with knowledge of the matter. Citigroup had sought about 7.7 billion pesos of claims in the case, said the person, who asked not to be named because the findings aren’t public. The government-appointed mediator, Jose Antonio de Anda Turati, excluded some of the New York-based bank’s claims because it didn’t provide sufficient documentation to support them, the person said.

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Citigroup Ordered to Turn Over Banamex Files to Fund

October 2, 2014

10/01/14 Bloomberg

banamexCitigroup Inc. (C), which is probing reports its Mexican unit was involved in $430 million of fraudulent loans, was ordered by a judge to turn over internal records about the deals to an Oklahoma pension fund suing the bank. New York-based Citigroup must provide files related to fraud allegations at Banco Nacional de Mexico SA, known as Banamex, including board materials about loans to oil-services firm Oceanografia SA, to the Oklahoma Firefighters Pension and Retirement System, Delaware Chancery Court Magistrate Abigail LeGrow ruled yesterday.

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Citigroup’s Banamex Says Alleged Bad Loans Will Hurt Profit

April 16, 2014

finance-market_dataThe Wall Street Journal, 4/14/14

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.

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Are U.S. Companies More Willing To Play Along With Mexico’s Corruption Culture?

April 16, 2014

money laundering -- dollar billsReuters, 4/15/14

Citigroup (NYE:C) disclosed Monday that it had found another case of fraud in its accounts-receivable program at Banamex, its Mexican unit, involving a supplier to Mexico’s state oil monopoly Pemex. In a teleconference, the bank’s chief financial officer, John C. Gerspach, did not reveal the identity of the supplier, but citing Pemex sources, the Mexican press identified it as Evya, a Mexican oil service company.

Gerspach reported that the breach involved less than $30 million in costs to Citigroup. He added that the supplier was in the process of paying back Citigroup and the bank expected “full restitution.”

According to its website, Evya,  based in the southeastern state of Campeche, is a “100% Mexican company” that provides engineering and maintenance services. Between 2003 and 2014, Evya signed 84 contracts with Pemex. The Mexican press identified brothers Francisco Javier, Luis y Roberto Camargo Salinas as Evya’s owners.

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