Forbes – Citi seems intent on continuing to invest in private equity and hedge funds despite restrictions from the implementation of the Volcker Rule in July of next year. The bank announced that it will invest $800 million of shareholder capital in its private-equity and hedge funds.
The Volcker rule, which was officially released to the public for comments last month intends to disallow such investments, often referring to these activities as “gambling” with shareholder money. Though the bank said that the investments were mostly “previously committed,” the move still comes as a surprise given that Citi and competitors such as Morgan Stanley and Goldman Sachs have cut down on proprietary trading operations in order to comply with the Volcker Rule (See Citi Shuts Another Prop Group as Banks Prepare for Volcker Rule).
