Phoenix Bank has been sold to Chinese company HCL Holdings for a reported $12.6bn, the Financial Conduct Authority has said.
HCL is a state-backed financial institution that is under investigation by US regulators for manipulating the price of its products.
The bank has also been fined for failing to prevent a $1.8bn loan from being used to pay for a luxury hotel in Las Vegas.
The company’s stock closed up by more than 13% at $27.90.
HCM Holdings has previously been embroiled in the scandals of its parent, China General Construction, and its US-based subsidiary, Citibank, that is being investigated by the US Department of Justice for its role in manipulating interest rates.
In a statement, Citigroup said: The FSCO and US authorities are investigating whether HCL failed to protect investors from the risk of market-related loss when it offered a $2.2bn loan to Citibanks in 2012 and 2013. “
HCL Holding is the subject of the FSOC’s ongoing criminal investigation.”
In a statement, Citigroup said: The FSCO and US authorities are investigating whether HCL failed to protect investors from the risk of market-related loss when it offered a $2.2bn loan to Citibanks in 2012 and 2013.
“The loan was approved under circumstances that, while technically compliant with FSOC guidance, could have caused a substantial financial risk to the Company, as a result of its own financial mismanagement, its own failure to disclose and its lack of adequate controls and procedures.”
US regulators are also looking into the actions of the firm’s former chief executive, John Browne, who resigned last month amid the financial scandal.
Mr Browne’s departure comes after he was accused of withholding information about an illegal US investment scheme involving Citibans US mortgage lender.
Mr Harris was named as the chief executive of Citiban in July, shortly after it announced a plan to sell its American mortgage lender in order to reduce the size of its US mortgage portfolio.
He stepped down as chief executive after the company admitted to paying $250m to settle US regulators over a $400m loan from a Citigroup affiliate.
The FSA said the sale of HCM Holding would “increase the ability of HCC to effectively manage its US and international financial exposures and the extent to which it can comply with other relevant financial requirements”.
It said the deal “will be completed in the near future”.
The bank will retain about 60% of its staff, it said.
The sale of the bank comes as Citigroup, one of the biggest US banks, is struggling to find an alternative buyer for the bank.
It announced plans to sell a majority stake in its US subsidiary to Chinese bank Guochuan Finance Group in January.
It is expected to take full control of the company by the end of the year.
“As we move into the future, we expect to have additional options to acquire more of our assets, as needed, for our long-term success,” Mr Harris said in a statement.
The new buyer of HMC Holdings will also be responsible for the new bank’s US operations, including its financial services and retail operations.
Mr H Harris has been chief executive since 2011.
Citigroup shares closed up 2.2% at US$32.60.