UPDATE 3-Citigroup fires 11 in fraud probe of Banamex unit

miércoles 14 de mayo de 2014 15:41 GYT

(Adds information about Medina-Mora, functions of some laid off executives, updates share price)

By David Henry and Elinor Comlay

NEW YORK/MEXICO CITY May 14 (Reuters) - Citigroup Inc has fired four senior executives and seven other employees, saying they failed to do enough to protect the bank from loan fraud at its Mexican unit Banamex, according to an internal memo sent to staff on Wednesday.

With the latest round of firings, the bank has terminated a dozen employees after learning of the Banamex fraud, underscoring the extent of Citigroup's problems at the unit. Citigroup has discovered some $565 million in loans linked to fraud at Banamex, suffered losses on loans made to homebuilders in Mexico, and fired a pair of rogue traders at the unit.

Banamex faces a U.S. criminal investigation of possible violations of money-laundering laws, a source has told Reuters, as well as probes by U.S. and Mexican authorities into the fraudulent loans.

The latest firings included employees across business lines, Chief Executive Michael Corbat said in the memo. Of the four managing directors let go, two were business heads in Mexico. Further disciplinary action could be taken against other employees both inside and outside of Mexico as the investigation continues, according to the memo.

A source close to the matter said that the executives fired in Mexico include the local business head of the bank's treasury and trade solutions group, and officials in corporate banking and risk management. The person declined to name them.

Citi said in late February it had discovered some $400 million in fraudulent loans at Banamex, prompting the bank to reduce its 2013 profit by $235 million.

The bad loans were made to Mexican oil services company Oceanografia, a contractor for Mexican state-owned oil company Pemex. Oceanografia appeared to have falsified invoices to Pemex that were used as collateral for loans from Banamex, Corbat said in a memo to employees in February.   Continuación...