Citigroup Stumbled Into Risk-Control Lapse in July, WSJ Says

  • Funds recovered as executives find potential $400 million loss
  • Bank spokeswoman says Citigroup has no remaining exposure

A lapse in risk controls on a series of trades from a London hedge fund led to a panic at Citigroup Inc. in July that could have cost the bank as much as $400 million, the Wall Street Journal said.

Citigroup clawed back the money over the next three months, the newspaper said Sunday on its website, citing unnamed people with knowledge of the matter.

“As soon as we detected this isolated issue through a regular review process, it was escalated to senior management and we immediately put additional controls in place to prevent a similar event from occurring,” Danielle Romero-Apsilos, a Citigroup spokeswoman in New York, said in an e-mailed statement. “After working with the parties involved, we have recovered all outstanding funds and have no remaining exposure related to this issue.”

She declined to discuss the identity of the client or the nature of the transactions.

According to the Journal, Citigroup’s systems were tripped up as the bank inadvertently extended excessive credit to LNG Capital LLP on trades that were mostly in bonds.

LNG couldn’t immediately be reached for comment. Chief Executive Officer Louis Gargour denied there was anything amiss with Citigroup when contacted in August.

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