(Reuters) – Citigroup Inc said on Friday it has discovered fraud in its Mexico subsidiary and is reducing its previously reported 2013 net income by $235 million (140 million pounds).
The company said in a statement the matter involved about $585 million in short-term credit extended by its Banamex unit to Oceanografia SA de CV, a Mexican oil services company that has been a supplier to the Mexican state-owned oil company, Pemex.
The announcement comes after Citigroup shares have fallen in recent weeks on concerns that slowing growth in emerging markets may reveal bad loans, as well as increase the risk of trading losses.
In the third quarter of 2013 problems with about $300 million of loans that Banamex had made to three Mexican homebuilders prompted Citigroup to book reserves for expected losses on the loans.
Oceanografia was recently banned for 21 months and 12 days from participating in government contracting processes after an internal review by Pemex found irregularities in its contracts with the firm, according to a notice in Mexico’s official gazette on February 11.
According to the statement from Citigroup on Friday, Banamex extended the credit to Oceanografia based on accounts receivable due the oil services company from Pemex. The bank said that after it learned of the ban on new contracts it began detailed reviews of its risk with Oceanografia.
Citigroup shares fell 1.1 percent to $48.16 in early trading.
(Reporting by David Henry in New York and Elinor Comlay in Mexico City; Editing by Jeffrey Benkoe and Phil Berlowitz)
Citigroup reports fraud in Mexico unit, lowers 2013 results
No comments:
Post a Comment