Citigroup Inc., one of five U.S. banks to fail the Federal Reserve’s stress test last week, fired two traders at its Banamex unit in Mexico for violating internal policies.
“Citi terminated two traders in 2013 for violating our code of conduct,” Danielle Romero-Apsilos, a spokeswoman for the New York-based bank, said today in an e-mailed statement. “We escalated this issue to regulators and took immediate action against these individuals.”
The fixed-income traders engaged in unauthorized transactions that may have resulted in losses of as much as “tens of millions of dollars,” Reuters reported earlier today, citing two sources close to the matter.
Banamex, which Citigroup acquired in 2001, is the biggest unit in the bank’s Latin America operations, which account for about 20 percent of total revenue. Citigroup reported Feb. 28 that fraud on loans made by the unit to a Mexican oil-services firm would cut last year’s profit by $235 million.
Citigroup last week failed the central bank’s stress test to determine its ability to withstand a major recession or economic shock after regulators found multiple deficiencies in the bank’s planning practices. The Fed said it was concerned with the company’s ability to project losses in “material parts of its global operations.”