Citigroup Inc., the largest U.S. bank, lost $20 million buying and selling gold and silver in 2002 and 2003, after a trader hid contracts and reported bogus prices, according to a New York Stock Exchange report.
A good portion of those losses can be attributed to Citigroup trader Gail Edmonds.
Edmonds reportedly went as much as 75 times over her trading limit in the month before she was fired in 2003.
When Citigroup discovered the hidden positions, the exchange fined Citigroup $500,000 for inadequate supervision of its precious-metals desk and released findings by a hearing board that investigated the trades.
Analysts called the case another example of lax control under former CEO Sanford Weill.
Citigroup discovered the trades on Jan. 8, 2003, after two customer inquiries about precious-metal prices. By then, Edmonds had made trades obliging the bank to deliver $331 million in gold and silver.
At one point in December 2002, Edmonds had $373 million in open positions. By the time she was fired, her trades obligated Citigroup to deliver about 903,300 ounces of gold and 4.3 million ounces of silver.
Charles Prince, who succeeded Weill as CEO in 2003, imposed tighter controls last year after Citigroup paid more than $5 billion in regulatory and legal settlements.
The U.S. Federal Reserve punished Citigroup for its regulatory lapses with a yearlong ban on mergers that ended in April, during which time the bank’s shares lagged behind peers such as J.P. Morgan Chase & Co. and Bank of America Corp.
Wal-Mart has its banking sights set south of the border. The retail giant has applied for a banking license in Mexico.
The news is troubling to American bankers who have been intent on blocking Wal-Mart from launching a homeland bank.
American bankers fear Wal-Mart will do to the banking industry what it has done to retail stores in the United States and around the world, undercut fees by offering a myriad of services.
Bank of America has announced it will expand into Europe and Asia through credit cards and corporate banking, rather than through acquisitions.
In Europe, the bank plans to expand its credit card business next year into several countries beyond the four where it has credit card operations now.
In Asia, the bank will sign a credit card joint-venture agreement with China Construction Bank Corp. in the coming months.
The World Bank and four of the largest regional development banks have agreed to share evidence and use common methods to probe corruption, but not all of them plan to publish companies’ names.
The step is the latest in a crackdown effort by World Bank President Paul Wolfowitz, who promised to renew efforts to prosecute firms that siphon cash for personal gain.
Although the banks have agreed to share information, they will not publish company or individual names because in some countries it would be considered libelous to do so. The information sharing will provide a way to “red flag” corrupt dealings among international firms.
The World Bank is immune to lawsuits in its 66 member countries, but individual national banks are not.
The World Bank currently publishes a list of more than 330 firms ineligible to be awarded World Bank-financed contracts because they were found to have violated the bank’s fraud and corruption provisions.
Members of the Institute of International Finance are urging leaders of the nations with the largest economies to make a renewed effort to work together to solve trade gaps.
Bankers describe the current political environment as a time of “heightened uncertainty” about the economy.
The IIF includes more than 360 financial institutions, and leaders said growth in the United States, the world’s largest economy, is slowing.
Despite encouraging signs in Japan and many parts of Europe, representatives said world economic prospects are heavily dependent on the extent of a U.S. slowdown.
Representatives also noted that the growing U.S. trade deficit and large foreign reserves that China and other Asian nations are accumulating are further clouding trade issues.
U.S. Bancorp has declared a quarterly dividend of 33 cents per common share.
At this quarterly rate, the annual dividend is equivalent to $1.32 per common share.
U.S. Bancorp, through its predecessor companies, has increased its annual common share dividend rate in each of the past 34 years and has paid a dividend for 143 consecutive years.
The most recent increase in the U.S. Bancorp common share dividend was reflected in the dividend paid on Jan. 16, when the dividend rate was raised 10 percent. Previously the rate had been $1.20 on an annualized basis, or 30 cents on a quarterly basis.
Rob Larimer covers banking and finance for the Colorado Springs Business Journal.