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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Mexico bank regulator, Citigroup report second fraud at Banamex

April 15, 2014

banamexReuters, 4/14/14

Citigroup and Mexico’s bank regulator on Monday said they uncovered a second fraud at Citi’s local unit Banamex, as part of a wider investigation following the discovery in February of fraudulent loans to oil services company Oceanografia.

Mexico’s National Bank and Securities Commission (CNBV) said the investigation found another company with under $30 million in fraudulent loans.  Citigroup (C.N) in February said it found $400 million in bad loans at Banamex, Mexico’s No.2 bank by assets, made to Oceanografia and backed by apparently fraudulent invoices to state-owned oil company Pemex.

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Citigroup: U.S. Sought Information From Mexico Unit

March 4, 2014

drawing bar chartThe Wall Street Journal, 3/3/14

Citigroup Inc.  is seeing the limits of its global reach. The New York bank said Monday it received subpoenas from the Federal Deposit Insurance Corp. and U.S. prosecutors, three days after the bank disclosed it had found allegedly fraudulent billings at its Mexico unit that cost it up to $400 million. A regulatory filing Monday disclosed that Citigroup and related parties—including the U.S. unit of its Mexico business, Banco Nacional de Mexico, or Banamex—have received grand-jury subpoenas issued by the U.S. Attorney’s Office for the District of Massachusetts tied to anti-money-laundering requirements.

Meanwhile, Citigroup’s exposure to Russia and Ukraine came under the spotlight. The instability in the region hammered stocks and bank stocks in particular. Of major U.S. banks, Citigroup shares fell the most Monday, losing 2.1% to $47.61. So far this year, they are down 8.6%, also last among the big six U.S. banks. Citigroup executives are fond of saying their “large global footprint is an asset, but it’s looking like a liability,” said KBW analyst Brian Kleinhanzl. He pointed to Citigroup’s exposure to places like Argentina, where investors have harbored concerns due to emerging-market volatility.

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Citigroup’s Losses on Loans to Mexico Homebuilders May Increase

October 16, 2013

citigroupBloomberg News, 10/15/2013

Citigroup Inc. (C:US), the third-largest U.S. bank, may face more losses on loans to Mexico’s three largest homebuilders as defaults mount and officials of the Latin America nation dash hopes for a bailout.

About half of the $168 million in loan-loss reserves Citigroup set aside in the third quarter for Latin America will be used to cover souring loans made to those firms, Chief Financial Officer John Gerspach said today on a conference call. At the end of September, the bank had less than $300 million of the assets, mostly construction loans, he said.

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Scotiabank to Increase Small Loans in Mexico

January 18, 2013

Bloomberg, 1/18/2013

Pesos by Flickr user AleiexBank of Nova Scotia says it can boost small loans in Mexico as much as 20 percent in a push for business in Latin America, where lending margins are double the Canadian average. Canada’s third-largest bank expects to add to a C$3 billion ($3 billion) micro-loan portfolio with credit to consumers and small businesses ranging from $300 to $3,000. The bank will target clients in the 240 Mexico branches it acquired last year from Citigroup Inc. (C)’s Banamex unit.

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Citigroup and Banamex evaluated presidential candidates, Peña Nieto considered ‘low profile’ [In Spanish]

May 3, 2012

Animal Político, 5/3/2012

Citigroup and Banamex analysts think that Enrique Peña Nieto will be Mexico’s next president, although they also believe that he is a ‘low profile’ candidate.

On February 23rd, a group of Citigroup analysts organized a meeting with investors and the three main presidential candidates, at which each of them had 50 minutes to present their national project and also had to answer questions from the audience. These meetings took part parallel to the 22nd plenary session of Banamex.

After the meetings, Citigroup, the brokerage Accival and the Department of Economic, Political and Social Studies of Banamex put together a document in which the three presidential candidates are evaluated.

Animal Político presents the results of these evaluations here.


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