US Supreme Court Refuses Citigroup Appeal in Oceanografia Case

The US Supreme Court declined to hear Citigroup’s appeal in a lawsuit accusing the bank of facilitating more than US$1 billion in losses tied to fraud at bankrupt Mexican oil services firm Oceanografia, allowing lower court rulings reviving the case to stand. The decision leaves alive claims that Citigroup’s Banamex unit advanced US$3.3 billion in loans to Oceanografia despite knowledge of excessive debt and forged authorization forms allegedly linked to contracts with PEMEX. Plaintiffs including Oceanografia bondholders, shipping companies, and Netherlands-based Rabobank allege Citigroup withheld key information about Oceanografia while collecting interest on cash advances.

A three-judge panel of the 11th US Circuit Court of Appeals found sufficient allegations that Citigroup benefited from the advances and suggested it “strains credulity” that a bank of its sophistication was unaware of the misconduct. Only the bondholders’ claims were at issue in the appeal, as Citigroup argued that they should not be allowed to pursue civil claims under the Racketeer Influenced and Corrupt Organizations Act (RICO). Bondholders countered that Congress did not intend to bar RICO claims simply because regulators such as the US Securities and Exchange Commission might pursue securities fraud actions, and noted the absence of allegations that anyone traded in reliance on fraudulent statements. Citigroup disclosed it later uncovered US$430 million of fraudulent cash advances, and in 2018 the SEC fined the bank IS$4.75 million over internal control failures at Banamex.

The Supreme Court’s refusal to take the case marks a notable chapter in the legal fallout from Oceanografia’s collapse, which was seized by the Mexican government in 2014 and declared bankrupt in 2016 after years of providing drilling services to PEMEX. The case is likely to proceed in lower courts, exposing Citigroup to significant potential liability and continued scrutiny over cross-border financing practices related to energy sector contracting.

The legal battle unfolds against the backdrop of significant strategic changes by Citigroup in Mexico, where the bank has been reshaping its operations. In December 2025, Citigroup completed the sale of a 25% stake in its Mexican retail banking unit, Grupo Financiero Banamex, to a company owned by Mexican investor Fernando Chico Pardo and members of his family, following regulatory approvals from Mexican financial and competition authorities.

When the process of separation between Citi and Banamex started, the Oceanografia case was a point of discussion. In 2022, former President López Obrador said that there was no ground for the Judicial Power to stop the buy-out of the financial institution. Mexico City’s judge, Felipe Guerrero, had suspended the sale process of Banamex until the lawsuit trial for the presumed deviation of money, promoted by Oceanografía, was resolved.

Nonetheless, the former president said the process would proceed normally and said that Citigroup had already agreed to prioritize Mexican investors with proven financial solvency who do not have any tax debt.

The transaction, solved in 2025, valued the stake at approximately MXN$42 billion, or roughly US$2.3 billion, and positioned Chico as Chairman of the Board of Banamex, while Manuel Romo remains CEO and Ignacio Deschamps continues as Chairman of the board. Jane Fraser, Citigroup’s Global CEO, said the sale advances the bank’s strategy to exit consumer banking in Mexico and focus on institutional clients by increasing investment in technology, talent, and client relationships. The divestment is part of a broader strategy announced by Citi to monetize its remaining Banamex holdings through an initial public offering, subject to market conditions and regulatory approval, and to exit consumer, small-business and middle-market banking operations in Mexico as part of its global restructuring.

The Banamex divestment marks a significant shift for Citigroup in a market where it once held a leading position. Banamex, the fourth-largest financial group in Mexico by total assets, serves millions of clients through a network of branches, ATMs, and commercial and pension fund customers. The move toward full divestiture via an IPO reflects Citi’s effort to streamline its global operations and concentrate on areas where it sees stronger strategic growth.

For the legal case tied to the Oceanografia fraud, the ongoing litigation underscores enduring legal risks for financial institutions engaged in large lending activities tied to energy sector contracts in emerging markets. Analysts and industry observers note that the continued proceedings in lower courts will test the application of anti-racketeering laws in complex cross-border financial disputes, particularly where allegations involve forged documentation and claims of concealed risks.