Mike Corbat Not Happy About Having Mexican Underlings Make Him Look Bad

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La Casa de Corbat is only boringnorth of the border.

Citigroup Inc. said as much as $400 million was stolen from its Mexico unit in what the bank's chief executive called a "despicable crime."

The New York bank announced Friday that it was cutting its fourth-quarter and full-year results by about $235 million after finding allegedly fraudulent billings at its Mexico unit, Banco Nacional de Mexico, or Banamex….

"Only two weeks ago I wrote to you about the absolute need for everyone at this firm to act in accordance with the highest ethical standards," Mr. Corbat wrote to employees in a memo Friday. "We now have a galling example of what happens when people fail this basic requirement…."

On Feb. 11, Citigroup said, it learned that Oceanografía had been suspended from being awarded new Mexican government contracts. That triggered a review by the bank of its relationship with Oceanografía.

Citigroup said it consulted with Pemex, which told it that a significant portion of the amounts allegedly owed to Banamex were based on fraudulent invoices from Oceanografía.

Citigroup Takes $400 Million Hit, Alleging Fraud [WSJ]
Citigroup: U.S. Sought Information From Mexico Unit [WSJ]
Mexico Said to Interview Citigroup Workers in Fraud Probe [Bloomberg]

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Mike Corbat's Got Two Choices For Citigroup Employees

Choice number one: everyone starts earning more money for the bank, following an exhilarating pep rally run by Corbat in the cafeteria involving senior executives shooting Citi swag into the crowd out of tee-shirt guns, cheerleaders, and  a Spartacus Workout demo and before/after shots of MC, meant to inspire people and show them what they're capable of if they really put their minds to something. Choice number two: Bank of America-style layoffs. Michael Corbat, new chief executive officer, says he wants to run a more efficient bank. That means rousing or cutting one of Wall Street’s least productive workforces. Citigroup generated about $206,000 of revenue for each employee through the first nine months of the year, down 7.5 percent from the same period in 2011, while rivals including Wells Fargo & Co. posted increases, according to data compiled by Bloomberg. Excluding a one-time writedown of $4.7 billion, Citigroup’s productivity rose less than 1 percent...“It’s likely they will have some sort of headcount- reduction program more in line with Bank of America, which is looking to get rid of about 10 percent of employees,” said Erik Oja, an equities analyst at Standard & Poor’s in New York. “Having the lowest revenue per employee is something they will have to address, and growing the revenues is pretty tough right now with net interest margins falling and loan growth so low.” Pandit probably was distracted from his cost-cutting goal as he grappled with public rebukes while trying to sell unwanted assets, said David Knutson, a credit analyst with Legal & General Investment Management America in Chicago, which owns Citigroup debt. Disposing of Citi Holdings assets remains “the elephant in the room,” he said. “He had a lot of plates in the air, and there were a couple of setbacks,” Knutson said. “Expense cuts are painful, and you’ve got to gore some sacred cows,” Knutson said. “You can’t do that if you don’t have an explicit mandate, if you don’t have focus and you’re hamstrung with legacy issues.” Citigroup Productivity Worst of Big Banks Shows Challenge [Bloomberg] Earlier: Mike Corbat Will Torch The Fat Off Citi Like He Torched The Fat Off His Abs