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

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

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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Citigroup Says Banamex CEO Resigns After ‘Challenges’

10/04/14 Bloomberg

banamexCitigroup Inc. (C) said Javier Arrigunaga resigned as chief executive officer of Grupo Financiero Banamex, the most senior departure stemming from an alleged $400 million fraud disclosed in February. Arrigunaga, 51, is being succeeded by Ernesto Torres Cantu, who joined the company about 25 years ago, the New York-based bank said yesterday in a statement. Torres, 50, will also take Arrigunaga’s place on Citigroup’s operating committee, according to a person briefed on the matter who asked not to identified speaking on personnel matters. Both are based in Mexico City.

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Citigroup Ordered to Turn Over Banamex Files to Fund

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

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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Mexico bank regulator, Citigroup report second fraud at Banamex

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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Scotiabank to Increase Small Loans in Mexico

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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