Citi says former Indonesia employee committed fraud

JAKARTA (Reuters) - Citibank <C.N> said a former employee had committed fraud in Indonesia and sought to reassure card clients on Saturday, a day after the central bank slapped lengthy bans on its credit card and wealth management businesses.

The sanctions came as Indonesian police investigate both the death of a Citi credit card client following questioning by debt collectors and a case of alleged embezzlement of around $2 million in its wealth management business.

Citi, which has previously only said it uncovered suspicious transactions, sent a letter to credit card holders on Saturday aimed at keeping them onboard, saying it had taken corrective action and the suspensions would not impact clients.

"We regret the two recent incidents involving the tragic passing of a credit card customer and the unacceptable fraudulent actions of a former employee," said Citi country officer Shariq Mukhtar in the letter.

"We are committed to restoring public trust in our franchise."

Police have detained a former wealth manager at the U.S. bank and said the case involves around $2 million.

An Indonesian woman has filed a civil suit against Citi seeking $347 million in damages, after her husband died on March 29 following questioning over bills on a Citi credit card.

Indonesia's central bank barred Citigroup's local unit from adding new credit card clients for two years and new customers for its premium wealth service for a year starting May 6. It said if the police found crimes were committed, it would revoke the bank's operating license.

The penalties will hit the expansion of Citi's business in Southeast Asia's biggest economy, where global banks are seeking to tap rising middle class wealth and millionaire tycoons.

(Reporting by Jakarta Bureau; Editing by Neil Chatterjee and Nick Macfie)