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Mexico bank regulator, Citigroup report second fraud at Banamex

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[April 14, 2014]  MEXICO CITY (Reuters)  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.

Citi, in the course of reviewing over $14 billion in financing, found a second company that had also received loans backed by Pemex receivables that had "similar issues" to Oceanografia, Chief Financial Officer John Gerspach said on a call discussing the bank's first-quarter results.

Mexico's CNBV is investigating whether the second company has similar loans with other banks, the regulator's statement said.

The CNBV said it is close to completing an investigation of Banamex's controls and processes.

(Reporting by Elinor Comlay; editing by Jonathan Oatis)

[ 2014 Thomson Reuters. All rights reserved.]

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