US banking giant Citigroup has disclosed that a Mexican subsidiary had been duped by fraud, resulting in a cut of an estimated $US235 million ($A263.22 million) from its most recent earnings report.
A Citi review on Friday determined that its Banco Nacional de Mexico unit, or Banamex, had extended $US585 million in short-term credit to a Mexican oil services company, only to discover that a "significant portion" of recorded spending was "fraudulent," Citi said in a statement.
The client, Oceanografia, is a major supplier to Mexico's state-owned company Pemex.
"While Citi's review of these matters is ongoing, Citi believes the fraud is isolated to this particular client," Citi said.
The post-tax cut in earnings reduces Citi's 2013 net income to $US13.7 billion compared with $US7.5 billion in 2012.
Citi chief executive Michael Corbat said the bank was working with law enforcement officials in Mexico to recover misappropriated funds and punish those responsible.
"I can assure you there will be accountability for those who perpetrated this despicable crime and any employee who enabled it, either through lax supervision, circumvention of our controls, or violating our code of conduct," Corbat said.
Citi shares were off 0.2 per cent at mid-morning at $US48.61.
