Citigroup Inc. faces losses of as much as $180 million on loans made to an Asian hedge fund whose foreign-exchange wagers went awry, prompting board-level discussions and a business shakeup, according to a person briefed on the matter. The hedge fund and Citigroup are in discussions on the positions and how they should be valued, said people with knowledge of the talks, who asked not to be identified because the discussions are private. The situation is fluid and the eventual losses may end up being smaller depending on how the trades are unwound, one of the people said. The matter was escalated to Citigroup’s board, one person said. The bank is also reorganizing its prime brokerage business as a result of the expected financial hit, the person said. It’s taking the FX prime brokerage unit out of the currency trading division and placing it under the oversight of its prime finance and securities services unit, according to a memo from the bank. Chris Perkins, who leads the bank’s over-the-counter clearing business, will become head of the FX prime brokerage, the company said in the memo Tuesday. Sanjay Madgavkar, who ran the FX prime brokerage unit and has worked at Citigroup for more than 20 years, is leaving the firm, the person said. Madgavkar declined to comment, as did Scott Helfman, a spokesman for the New York-based lender. https://www.bloomberg.com/news/arti...to-face-180-million-loss-on-loan-to-asia-fund Anyone an idea which Asian hedge fund is referred to?
how does someone like Citi end up losing $180mil? don't they have automated risk-management systems like other brokers to make sure positions are liquidated before something like this happens?
Their loss is due to them lending money to ppl who bet in the forex market and lost; their loss is not due to counter-party risk.
What kind of sane bank gives out loans for people to trade Forex with? Play stupid games, win stupid prizes.
If Citibank has bad debt with the hedge fund, it means this fund has gone bankrupt like optionsellers. I wonder what is the name of this hedge fund. To lose this amount, I don't think this hedge fund is small.
Like every investment bank ? No one/bank makes winning bets/loans 100% of the time. This instance the loss is simply bigger than expected, that's all.
investment banks give out loans for all kinds of things. giving out loans for trading one of the highest leveraged products out there to a hedge fund over which the loaner has no say in how it manages risk is peak stupidity. well at least we know that the people at Citi would make terrible traders; they have no concept of risk management. ask yourself: would you ever loan out millions to hundreds of millions of dollars to a hedge fund that trades an instrument like forex, nat gas, or crude oil? these guys are absolute morons and they deserve whatever losses they eventually settle with.
It states in the Bloomberg article that the hedge fund in question is "managed by a unit of GF Holdings (Hong Kong) Corp"; which is a subsidiary of GF Securities: http://en.gf.com.cn/ Hope this helps