Citigroup is bracing itself for the results of an Securities and Exchange Commission probe into its accounting practices, heaping further misery on the banking giant following its sub-prime write down issues.
The US financial regulator is believed to be conducting an investigation into the way that Structured Investment Vehicles appear on Citigroup's books.
SIV's are used to raise funds to bankroll long-term investments such as mortgages, but do not appear on company balance sheets or in regulatory reports filed with the SEC. This has raised suggestions that SIV's generate an accounting black hole.
The banking giant also recently announced a write-down of between $8bn (£3.8bn) and $11bn in the fair value of its $55bn pot of sub-prime related direct exposures held in its Securities and Banking business.
Citigroup have rebuffed any suggestion of below-par accounting at the bank. A spokeswoman told The Times: 'Citigroup is confident in its SIV accounting. It is proper and in thorough accordance with all applicable rules and regulations. '
The write-down led to chief executive Chuck Prince's resignation, but Citigroup is now bracing itself for more possible fallout on the back of the SEC probe.
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