Greece: Citigroup Denies Wrongdoing
April 21, 2011
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By Mark Brown, Alkman Granitsas and Costas Paris
Of DOW JONES NEWSWIRES
LONDON (Dow Jones)–Citigroup Inc. (C) said Thursday it is cooperating with Greek authorities following official allegations that an email from one of its employees stirred debt-restructuring rumors that roiled the country’s financial markets.
Two Greek government officials told Dow Jones Newswires Thursday that the bank in question was Citigroup.
Citigroup has denied any wrongdoing.
The US investment bank Citigroup is at the centre of an investigation by the Greek authorities into rumours that the debt-laden nation was preparing a restructuring of its debt over the Easter weekend.
Citigroup is insisting it has done nothing wrong after it emerged that an email from one of its traders prompted the inquiry.
In a statement, the Greek finance ministry revealed that it had asked public prosecutors to “investigate possible criminal conduct” after uncovering an email from within “an international investment bank”.
Citigroup is adamant that it has done nothing wrong. “We are co-operating with the authorities and do not consider there to have been any wrongdoing by Citi or its employees,” the bank said.
Greek bond yields jumped on Wednesday, amid growing expectations of an imminent restructuring.
To remind readers — here is a research note that Citi analysts dispatched on Wednesday (we’ve already covered much of it):
40% Likely Haircut… — The Greek government has a number of tools at its disposal such as: more austerity; debt maturity extension; lower interest rates; asset sales; and an outright haircut. We believe that the best combination to achieve a sustainable Debt/GDP is through a combination of measures and a 40% haircut.