Citi announced on Friday that it had discovered a fraud at Banamex, the wholly-owned Mexican subsidiary that has been one of the bank’s best-performing divisions. Earnings for 2013 were reduced by $235m, Citi said.

The bank said the fraud was tied to loans made to Oceanografia, a troubled Mexican oil services company. Banamex was lending to Oceanografia based on invoices for work it said were approved by Petróleos Mexicanos, the state-owned company, which Citi said turned out to be falsified.

In a forceful statement accompanying the earnings revision, chief executive Mike Corbat said the company would be “relentless” in seeking to recover funds lost in “this despicable crime”.

Citi believes the fraud had help from at least one person inside the bank. In his statement on Friday, Mr Corbat pledged punishment for “any employee who enabled it, either through lax supervision, circumvention of our controls, or violating our code of conduct”.

“At this point, we believe this is an isolated incident,” Mr Corbat said. He added: “All will be held equally responsible and we will make sure that the punishment sends a crystal clear message about the consequences of such actions.”

Mr Corbat said the bank was co-operating with Mexican law enforcement. But even if the bank was the victim of the crime, the bank could be questioned by US authorities over its controls and disclosures.

Citi was rebuked by bank regulators in March last year for “deficiencies” in anti-money laundering controls, including at a unit of Banamex.