Citigroup can’t seem to get out of its own way.
The sprawling global banking giant finds itself once again ensnared in an international business scandal—this time in Mexico—which threatens to ding its bottom line. The latest problem for Citi, which could potentially deliver a blow to its reputation, centers on a Mexican fraud scandal that has forced the US banking giant to re-state its fourth-quarter results by $235 million and lower its 2013 net income to $13.7 billion from $13.9 billion, due to alleged fake billings issued to Citi’s giant Mexican subsidiary Banamex by oil company Oceanografia S.A. de C.V.
This isn’t the first time the bank, which has touted its global reach as a boon, has gotten caught up in an embarrassing international scandal. Back in 2004, Citi was compelled to close a private bank after running afoul of Japanese regulations. Five years later, Citibank Japan was ordered to suspend its activities over concerns around money laundering (paywall). Citi also has been one of the main targets of international regulators looking into banks’ manipulation of a key rate known as London interbank offered rate (Libor).
The most recent Mexico problems highlight some of the challenges that the relatively new chief executive, Michael Corbat, faces in restructuring a bank(paywall) that has struggled to cast off its image as one of the banking system’s weak links.
What may be even more galling for Corbat is that the Latin American sector, which includes Mexico, had been one of the few revenue bright spots (paywall) in Citi’s international operations in the fourth quarter.