Citigroup said Javier Arrigunaga resigned as chief executive officer of Grupo Financiero Banamex, the company's Mexican subsidiary. Ernesto Torres Cantu was named to succeed him.

"In light of the difficult challenges our franchise in Mexico has faced over the past year, Javier Arrigunaga feels it is the right time for new leadership," Manuel Medina-Mora, Banamex's chairman and Citigroup's co-president, said Friday.

Citigroup is investigating a $400 million fraud it disclosed in February that involved loans to oil-services provider Oceanografia SA. The New York-based bank has dismissed at least a dozen employees in connection with the case.

Banamex agreed to make the loans secured by promises the bank would be repaid by Petroleos Mexicanos, the state-owned oil company for which Oceanografia was doing work. Most of the loans were supported by fraudulent invoices, Citigroup said in February.

Arrigunaga, who was on Citigroup's operating committee, has served as president of the Mexican Bankers Association, according to Citigroup's statement.

"He took a lead role in developing the recently passed financial reforms, a priority of the government of President Pena Nieto and an important step for our industry," Medina-Mora added in the statement, referring to Mexican President Enrique Pena Nieto.

Rodrigo Zorrilla will serve as president of Grupo Financiero Banamex and will report to Torres, Citigroup said.

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