Citi Fund's Woes Hit Wachovia, Fifth Third

Citigroup(C Quote) just keeps adding to its own pain.

The struggling New York banking titan is now dealing with losses in one of its hedge funds that has lost some 75% in value and has several large banks, including Fifth Third Bancorp(FITB Quote) and Wachovia(WB Quote), reeling from losses from investments in the fund, according to the Wall Street Journal.

Both Fifth Third and Wachovia, along with an unnamed third regional bank, had put more than $1.6 billion into Citi's Falcon Strategies hedge fund through their bank-owned insurance programs. The losses may pressure the struggling New York banking titan to give some of the money back to the three banks that have lost money, the Journal said.

A spokesman for Citi's alternative investments arm declined to comment on the article.

Cramer: Wachovia's Golden Brand Is Dead

Wachovia was the most heavily exposed, with more than $1 billion invested, which represented 7% of the bank's $14.9 billion BOLI assets, according to the article.

Earlier this month, Wachovia said its first-quarter loss was 80% higher than what it originally reported in mid-April due to writedowns related to its BOLI policies. Wachovia increased its loss to $708 million, or 36 cents a share, it said in a filing with the Securities and Exchange Commission on May 6.

Wachovia had concluded after a review that it would record valuation losses of $315 million on the related BOLI assets, it said.

Wachovia told Reuters that the writedowns were related to losses in Citi's Falcon Strategies hedge fund. A request for comment was not immediately returned to TheStreet.com.