Citigroup is tackling a second fraud involving its Mexican Banamex unit.
Citigroup is tackling a second fraud involving its Mexican Banamex unitReuters

Citigroup announced that it had opened a second internal fraud investigation involving its Mexican unit, Banamex.

The $15m (£9.4m) fraud, which involves the bank's security service business, comes in addition to an internal inquiry the bank is pursuing related to Mexican oil services company, Oceanografia.

The bank said it had found "illegal conduct" and the use of "intercepted telecommunications".

Citigroup said it is cooperating with law enforcement and regulators in both the US and Mexico and is disbanding the security unit. Security services for Banamex executives now will be provided by Citigroup's global security unit.

"The conduct of the individuals involved is appalling," Citigroup's chief executive, Michael Corbat, said in a statement.

Citigroup's Banamex unit was embroiled in an alleged accounting fraud at Oceanografia earlier this year, leading to 12 individuals being fired.

Citigroup discovered the fraud in Banamex's personal-security unit while investigating the Oceanografia account.

News of the fraud sullied Citigroup's results which rose 6.6% from a year earlier, thanks to strong trading results.

For the quarter, Citigroup reported net income of $3.44bn, or $1.07 a share, compared with $3.23bn, or $1 a share, a year earlier. The profit was $1.15 a share, beating the $1.12 expected by analysts polled by Thomson Reuters.

Revenue rose 9.5% to $19.6bn, beating analysts' expectations of $19.05bn.

Corbat also announced that Citigroup plans to rein in its sprawling global network, retreating from 11 markets, including South Korea, Japan, Hungary, Egypt, Guatemala and Guam.

Sales of the earmarked operations are expected to be completed by the end of next year and for reporting purposes will join Citigroup's collection of unwanted assets in the first quarter of 2015, the bank said today in a statement.

Corbat said: "I am committed to simplifying our company and allocating our finite resources to where we can generate the best returns for our shareholders.

"While we have made progress optimising these 11 consumer markets, we believe our global consumer bank will achieve stronger performance by focusing on those countries where our scale and network provide a competitive advantage."