Citi Axing 300 Jobs Amid Banamex Scandal and Profit Drop

Citi is planning to axe 200 to 300 jobs amid a drop in profits and a major fraud scandal that has cost the bank $235m in losses.

Sources close to the bank told IBTimes UK that the Wall Street giant will cull its headcount in its stock and bond trade handling division due to the profit slump in the area.

Citi employs 251,000 people across the globe and is due to report its first quarter results on 14 April.

"We continue to tightly manage expenses, making targeted headcount reductions in light of current market conditions. At the same time, we are adding some talent strategically," said a Citi spokesperson to IBTimes UK.

However, Citi declined to comment on the job cuts.

Analysts forecast a near 5% drop in first quarter net income to $3.63bn (£2.2bn, €2.6bn).

Meanwhile, Citi is facing investigations from the US Securities and Exchange Commission and from Mexican authorities over fraudulent activity relating to its Banco Nacional de Mexico unit.

Banco Nacional de Mexico – also known as Banamex – conducted a range of fraudulent activities over the year and sources say it is now facing two intensive investigations into this unit.

According to media reports, Banamex made the mistake of lending money to Oceanografia (OSA), an oil services company that supplies Mexican oil company Pemex.

Citigroup learned of the incident from Mexican government reports of suspended contracts.

Subsequently, the bank and Pemex investigated OSA to assess the damage. As much as $400m was misappropriated in the fraud, which hit the bank's balance sheet by $235m, bringing its 2013 net income down to $13.7bn, according to Citigroup.

One source said the SEC will investigate Citi for accounting fraud and will also see whether the parent company violated the Foreign Corrupt Practices Act.

Citi has already slashed the pay of an ultra-senior executive, Manuel Medina-Mora, after the Mexico subsidiary he looks after, cost the bank millions of dollars in a money laundering scandal.

According to a company filing, co-president of Citigroup Medina-Mora received "only" $9.5m in 2013, from $11m the previous year.

In the same filing, Citi said it will slash pay and bonuses in 2014 to clawback some of the $235m it lost from Banamex.

Last month, Citi revealed that fraudulent activity at Banamex dragged down the bank's net income down to $13.7bn.