The central bank of Norway, Norges Bank, is reportedly suing the New York-based financial company Citigroup for over $835 million over claims that they were mis-advised on the state of Citigroup’s finances.
In the lawsuit, Norges Bank says that they bought shares and stocks in Citigroup in the period January 2009 – January 2010. The institution claims that they did so without being made fully aware of Citigroup’s vulnerability to risk from the volatile and credit-crisis-causing subprime mortgage market.
The Norwegian central bank alleges that it lost more than $835 million on investments as a result of buying shares in Citigroup, who later came close to insolvency at the height of the global economic crisis.
The lawsuit says:
“When the market slowly learned the truth of Citi’s financial condition, Citi came close to insolvency, and plaintiff lost a substantial amount of its investment.
“Citi’s near-demise had its genesis in the company’s increasing willingness to take on risks for the sake of profit, without regard for – and without disclosing – the magnitude of the downside exposure it faced if those risks materialized.”
Norges Bank is looking to recover the $835 million it claims it lost, as well as an additional $100 million. If Citigroup loses this lawsuit, it is likely that the company will have to rely on some form of professional indemnity insurance to pay these compensatory amounts.