Citigroup, the third-biggest U.S. lender, invested about $800 million of shareholders’ money in its own private-equity and hedge funds during the third quarter as regulators seek to curtail the practice, according to Bloomberg
The bank invested the money in “Citi-advised” funds while selling $1.1 billion of separate hedge-fund and private-equity assets, New York-based Citigroup said in a Nov. 4 filing.
Regulators are drafting the so-called Volcker rule, which aims to restrict banks that accept deposits from making bets with shareholder money. The proposed rule would prohibit the banks from owning more than 3 percent of hedge funds and private-equity funds and also from investing more than 3 percent of Tier 1 capital in the funds.
“The $800 million of purchases primarily relate to funding of previously committed investments in Citi’s private-equity and hedge funds, which are more than offset by divestitures and liquidations,” Danielle Romero-Apsilos, a Citigroup spokeswoman, said in an e-mailed statement. “We continue to make significant progress toward meeting the requirements of the Volcker Funds portion of the new financial bill….”
Read more about this at http://www.bloomberg.com/news/2011-11-07/citigroup-puts-800-million-in-own-hedge-funds-private-equity.html
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