Citigroup charges Parmalat with discrimination

Bankrupt Parmalat has shown "stark and illegitimate discrimination" against non-Italian banks in the way it plans to exclude …

Bankrupt Parmalat has shown "stark and illegitimate discrimination" against non-Italian banks in the way it plans to exclude billions of euros in credits from a debt-for-equity swap, Citigroup has said.

The world's biggest financial services group on Friday lodged a petition with an Italian court to annul the rescue plan for the stricken food giant, which filed for insolvency last December under debts of €14 billion.

The petition said the exclusion of creditors from becoming important shareholders in a new, restructured Parmalat via the planned debt-for-equity swap was unfair to foreign banks.

"New Parmalat will be entirely run by Italian bank creditors," said the petition, which listed other affected parties including CSFB and HSBC.

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The credit exclusions slashed international banks' access to new Parmalat shares from 24 per cent to 2.3 per cent, while Italian banks' future ownership was cut from 29 per cent to 28.9 per cent, Citigroup said in the petition.

"This result is reached by a stark and illegitimate discrimination between creditors, which in essence boils down to an evident disparity of treatment between Italian and non-Italian banks," the US bank added.

Citigroup wants the court in the Lazio region to annul Parmalat's rescue plan as well as the special legal decree that enabled Parmalat to carry out its restructuring. Citigroup also reserves the right to demand compensation.

As well having more than €500 million in credits excluded from the debt swap plan, Citigroup in July was sued for $10 billion by Parmalat's administrators, who allege That $8 billion was "lost, stolen or wasted by Parmalat insiders" with Citigroup's active assistance.

Citigroup has denied wrongdoing.