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 latterâs 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: âWhen the market slowly learned the truth of Citiâs financial condition, Citi came close to insolvency, and plaintiff lost a substantial amount of its investment.
âCitiâs near-demise had its genesis in the companyâs 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.â
The Scandinavian bank is looking to recoup its losses on its investment in Citigroupâs common shares while also recovering an additional $100 million.
Vikram Pandit, Citigroupâs chief executive officer, is named in the legal documents as one of the defendants.
By Jim Ottewill