[March 13, 2014]NEW YORK (Reuters) — Citigroup Inc,
which recently discovered it made some $400 million in fraudulent
loans to a company in Mexico, found three other sets of smaller
loans that may be suspicious, the bank's chief financial officer
told a group of investors last week.
The three sets of problem loans were for less than $10 million each,
and the bank was reviewing its underwriting and monitoring
processes, Sanford C Bernstein analysts who attended last week's
presentation wrote in a report dated Wednesday.
"Management is confident that this is an isolated issue," according
to the report, which was based on CFO John Gerspach's remarks on
March 5 to a small investor conference hosted by the brokerage in
The Bernstein report did not provide details on the three
portfolios. Citigroup spokesman Mark Costiglio declined to describe
Citigroup has $1.9 trillion of assets. The company said on February
28 that it was reducing its 2013 net income by $235 million to $13.7
billion because it discovered fraud in at least $400 million of
loans to Oceanografia, a supplier to Pemex, the state-owned oil
company of Mexico.
Three days after Citigroup disclosed the loss and two days before
the Bernstein conference, Gerspach said during an investor
conference webcast in Orlando, Florida, that the bank had "kicked
off a rapid review" of similar loans to suppliers around the world
and found no similar issues.
The bank has $14 billion of such supplier loans, he said then.
Costiglio said in a statement that the bank was still investigating
the Mexico loans and "working to identify any areas where we need to
strengthen our controls through stronger oversight or improved
Some investors were concerned that the Citigroup fraud in Mexico
came to light as the Federal Reserve reviews the bank's annual
capital plan and requests to buy back stock and increase dividends,
analyst Richard Ramsden of Goldman Sachs said in a research note on
The outlook for more capital returns from the bank was less certain
than it was a month ago, Ramsden said.
(Reporting by David Henry in New York;
editing by Amanda Kwan)