Citigroup memo apologised for bond trades

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The Independent Online

Citigroup's head of global capital markets, Thomas Maheras, sent a memo to employees apologising for a series of bond transactions last month which are now the subject of an investigation by the UK Financial Services Authority.

Citigroup's head of global capital markets, Thomas Maheras, sent a memo to employees apologising for a series of bond transactions last month which are now the subject of an investigation by the UK Financial Services Authority.

Publication of the memo came on the same day that the world's largest bank was once again embroiled in scandal, as the Japanese financial regulator said the group may face a fine for breaches of its securities and exchange rules.

The two investigations come just months after Citigroup received two fines from US regulators for breaches of regulations and just weeks after its chief executive, Charles Prince, made a speech vowing to put an end to the series of regulatory failures which have hit the firm over the past year. Speaking at a conference in June, Mr Prince said the bank wanted to "stay out of the headlines".

The latest scandal involves transactions made in Tokyo last year, where Citigroup is alleged to have told customers they would have to make a bond purchase with the group as a condition of receiving a loan. The Tokyo regulators also say Citigroup gave misleading information to its clients over its structured products.

In a statement released yesterday, the bank said: "Citigroup regrets this matter and takes this situation very seriously. The bank will undertake all necessary corrective actions."

In the UK, Citigroup was apologising for another scandal, for which it is likely to be fined by the FSA once its investigations are concluded. The inquiry involves a series of transactions in European government bonds at the start of last month, which flooded the market and while netting a profit for Citigroup, caused heavy losses for several other banks.

The main transaction saw more than €10bn (£6.8bn) of bonds sold in less than two minutes, which Citigroup then bought back 30 minutes later at a lower price.

In a memo to all global corporate and investment banking employees, Mr Maheras said: "As an industry leader, Citigroup is committed to holding itself to the highest standards in business practices. However, we did not meet our standards in this instance, and as a result we regret having executed this transaction. Unfortunately, we failed to fully consider its impact on our clients, other market participants, and our regulators."

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