Citigroup Says Banamex CEO Resigns After ‘Challenges’

Citigroup Inc. said Javier Arrigunaga resigned as chief executive officer of Grupo Financiero Banamex, the most senior departure stemming from an alleged $400 million fraud disclosed in February.

Arrigunaga, 51, is being succeeded by Ernesto Torres Cantu, who joined the company about 25 years ago, the New York-based bank said yesterday in a statement. Torres, 50, will also take Arrigunaga’s place on Citigroup’s operating committee, according to a person briefed on the matter who asked not to identified speaking on personnel matters. Both are based in Mexico City.

Citigroup is investigating the alleged fraud, which involved loans to oil-services provider Oceanografia SA. CEO Michael Corbat has pledged to hold employees accountable and the bank has dismissed at least a dozen so far. A judge has ordered the company to turn over internal records to an Oklahoma pension fund that is suing the bank over the case.

“In light of the difficult challenges our franchise in Mexico has faced over the past year, Javier Arrigunaga feels it is the right time for new leadership,” Manuel Medina-Mora, Banamex’s chairman and Citigroup’s co-president, said in the statement.

Banamex agreed to make the loans secured by promises the bank would be repaid by Petroleos Mexicanos, the state-owned oil company for which Oceanografia was doing work. Most of the loans were supported by fraudulent invoices, Citigroup said in February.

Financial Reforms

The U.S. Securities and Exchange Commission, the Mexico banking regulator CNBV, Mexican prosecutors and the New York field office of the Federal Bureau of Investigation have been investigating the alleged fraud.

Arrigunaga has served as president of the Mexican Bankers Association, according to Citigroup. His last day at the company he has worked for since 2002 will be Oct. 17, according to the person briefed on the matter. Arrigunaga declined to comment when reached by phone, as did Paulo Carreno, a spokesman for Banamex based in Mexico City.

“He took a lead role in developing the recently passed financial reforms, a priority of the government of President Pena Nieto and an important step for our industry,” Medina-Mora added in the statement, referring to Mexican President Enrique Pena Nieto.

Torres will keep his role as CEO of Banco Nacional de Mexico, the consumer businesses in the country. Torres, who has an MBA from Georgia State University and started his career as a corporate banker, has held roles overseeing retail, commercial and small-business services, the company said.

Rodrigo Zorrilla, who joined Citigroup in Mexico in 1992, will serve as president of Grupo Financiero Banamex and will report to Torres. Before taking his current role as CEO of the institutional clients group in Japan, Zorrilla was chief operating officer in Asia.

Citigroup rose 2.1 percent to $52.32 yesterday in regular New York trading. The shares are little changed this year, trailing the 3.6 percent gain for the 24-company KBW Bank Index.

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