Citigroup's loss on a surge in the Swiss franc this month was exacerbated by the bank’s decision to let protections against currency swings lapse a week earlier, according to people with knowledge of the situation.
Bloomberg News reports that the bank didn’t renew derivatives trades that would have blunted the impact from Switzerland’s surprise move to let the franc rise, said the people, who asked not to be identified discussing the strategy.
The company’s losses exceeded $200 million in the hours after the announcement, before traders pared the deficit to closer to $150 million, the people said.
While the expiration of hedges contributed to the losses, a greater portion came from customer trading, said Danielle Romero-Apsilos, a spokeswoman for New York-based Citigroup.
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