Citigroup sued by Norway’s central bank
Norway’s central financial institution has launched a lawsuit against Citigroup claiming it made losses of over $835 million on investments after being mis-advised on the condition of the bank’s’s financial health.
Norges Bank filed a law suit stating that it acquired stocks and shares in Citigroup between January 2007 and January 2009 without being made fully aware of the latter’s exposure to risk.
In particular, the bank is claimed to have concealed its exposure to the subprime mortgage market, the volatility of which is believed to have been one of the root causes of the global credit crisis.
The claimant said: “When the market slowly learned the truth of Citi’s financial condition, Citi came close to insolvency, and plaintiff lost a substantial amount of its investment.
“Citi’s near-demise had its genesis in the company’s increasing willingness to take on risks for the sake of profit, without regard for - and without disclosing - the magnitude of the downside exposure it faced if those risks materialized.”
The Scandinavian bank is looking to recoup its losses on its investment in Citigroup’s common shares while also recovering an additional $100 million.
Vikram Pandit, Citigroup’s chief executive officer, is named in the legal documents as one of the defendants.
By Jim Ottewill
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