By Sakthi Prasad
BANGALORE (Reuters) - CITIGROUP (C.NY)Inc
Citigroup and AIG's announcements came in letters to the U.S. Securities and Exchange Commission (SEC), both dated April 13 and made public on Thursday, which gave details about their repurchasing agreement accounting between 2007 and 2009.
The news follows Bank of America Corp's
Citi erroneously reported $9.2 billion of repos as sales -- its largest quarterly amount -- during the third quarter of 2009 and said in the letter the move was unintentional.
Bailed out U.S. insurer AIG
However, the insurer said the accounting rules allowed it to record certain repos as sales.
Repurchase agreements, or repo, is a form of financing that allows a borrower to opt for cash loans once they have given financial securities to the lender as collateral.
The borrower would then buy back the collateral from the lender at a later date to close out the loan.
Classifying repo transactions as a sale instead of showing them as borrowings masks the leverage position of a company as the assets would be removed from the balance sheet.
The SEC in March said it had made inquiries of about 24 financial firms to determine whether their repo activities over the past few years had been similar to those of Lehman Brothers
Holdings Inc
Citigroup said the repurchase agreements qualifying for sales accounting were primarily executed in its Japanese and U.K. broker-dealers unit. Citibank in North America accounted for lesser transactions.
The practice did not alter its results of operations, revenue or liquidity, Citi said in its letter.
AIG also said the classification had no material impact on its business.
(Reporting by Sakthi Prasad in Bangalore; Editing by Valerie Lee, Sharon Lindores)
