Citigroup investigated by Greece on debt restructuring rumours

Citigroup is being investigated by the Greek authorities after one of its staff warned the bank's clients of the possibility of the country announcing a debt restructuring this weekend.

Many market observers already believe some form of Greek debt default is now inevitable, a year after the country's multi-billion euro bailout by the European Union that sparked nationwide protests against austerity measures.

"There seems to be some increased noise over Gr debt restructuring as early as this Easter weekend," wrote the Citigroup employee, adding that Greek officials were denying that they had any such plans.

The email prompted Greece's finance ministry to ask the local prosecutor to launch an investigation into the market rumours, which the country blames for its continued economic woes.

In a statement Citigroup said: "We are co-operating with the authorities and do not consider there to have been any wrongdoing by Citi or its employees."

The investigation came as Greek credit default swaps hit a record high of 1,335 basis points, up 53 points, meaning the annual cost of insuring £10m of the government's debt would cost more than £1.3m.

Many market observers already believe some form of Greek debt default is now inevitable, a year after the country's multi-billion euro bailout by the European Union.

In another note to clients, Citigroup on Thursday said it thought the chances of a "debt event" before the end of the year were rising.

Most expect the Greek government and its creditors to agree to a rescheduling of the country's debt repayments to help it meet its obligations.