Citi has $22 b exposure to five crisis-hit European nations

Monday, 18 July 2011 00:00 - - {{hitsCtrl.values.hits}}

NEW YORK: Banking major Citigroup has exposure of at least USD 22 billion to five European nations —Greece, Ireland , Portugal, Spain and Italy — grappling with debt woes.

Citi, which fought the financial meltdown with American taxpayers’ money, has revealed that exposure to these five countries include a whopping USD 11 billion net credit exposure.

“As of 30 June, 2011, Citi’s net funded exposure to the sovereign entities of Greece, Ireland, Italy, Portugal and Spain (GIIPS), as well as financial institutions and corporations domiciled in these countries, totalled USD 13 billion, based on our internal risk management measures,” Citi said.

The debt turmoil in all these five nations has raised alarming concerns for the overall health of global economy. Among them, Greece and Portugal are fighting severe financial crisis, which even threatens to result in sovereign defaults.

The disclosure about its exposure to GIIPS, came on Friday when India-origin Vikram Pandit-led Citi posted a profit of USD 3.34 billion for the three months ended June 2011 — the entity’s sixth straight profitable quarter.

Citi’s USD 13 billion exposure includes USD 2 billion worth assets held in various trading portfolios that are marked-to-market daily.

Trading portfolio exposure level varies, depending on inventory consistent with customer needs, the banking entity noted.

According to Citi, it also has a USD 9 billion unfunded exposure, primarily to multinational corporations which are headquartered in GIIPS countries.

“Citi also has additional, locally-funded exposure in these countries to retail customers and small businesses, as part of our local lending activities.

“The vast majority of this is in Citi Holdings (Spain and Greece)...,” it said.

The banking behemoth stressed that Greece, Ireland, Italy, Portugal and Spain, as well as the financial institutions and corporations domiciled in these nations, “are an important part of the global Citi franchise”.

Citi’s latest quarterly profit of USD 3.34 billion came on the back of lower credit costs and improved showing in investment banking segment.