A Citibank spokesman Wednesday dismissed outright suggestions in the blogosphere that a recent decision by the company to quietly reduce the daily ATM cash withdrawal limits of some of its customers had something to do with Citibank's cash-reserve position.

Rather, the move was a purely precautionary one prompted by fraudulent ATM activity in the New York City area, said Robert Julavits, a spokesman for the bank.

"We did this to protect our customers," Julavits said, adding, "There is no connection between this action and Citi's capital position."

Citibank's new caps on ATM withdrawals for some of its customers started in mid-December but came to light only last week after the New York Daily News carried a story on it. Since then the only official explanation from the company has been in the form of a brief two-paragraph statement which said the Citibank had "temporarily lowered ATM withdrawal limits on a small population of customers," because of "isolated fraudulent activity."

The statement offered no details on the nature or scope of the problem, how many customers might have been affected, what the lowered daily caps were or even if only customers in New York City had been affected, as suggested by media reports. Julavits did not respond to questions on whether fraudulent activity mentioned in the Citibank statement was the result of specific ATMs being tampered with, or why the limits were lowered only for some customers and not all.

According to Julavits, Citibank has so far not taken steps to inform any of the affected customers of their lowered daily ATM withdrawal limits. But he maintained that any customer needing more cash than their new daily limits only needed to call a Citibank customer representative to get instant access to additional funds.

The relatively sparse information from Citibank so far appears to be stoking some concern in the blog world over the real cause for the lowered daily limits, especially in light of the financial troubles the company is currently facing.

For instance, The Market Oracle, a U.K-based online publication focusing on financial services issues. expressed doubt over Citibank's claims of fraudulent ATM activity. Instead the move "looks an awful lot like Citibank is experimenting with rationing their cash outflows," the site noted.

Several readers responding to an article on the new limits on EconomicsBriefing.com expressed similar doubt.

One anonymous poster, for instance, suggested that it was "more likely that Citi is having problems acquiring hard cash, and is passing on that difficulty to their customers."

Another anonymous poster on the same blog posited that the ATM fraud claim was an obvious ruse by Citibank. "Internal problems and cash reserves are certainly one aspect. Another reason is to generate more fees by forcing a greater number of transactions," the poster said.

Avivah Litan, an analyst with Stamford, Conn.-based analyst firm Gartner Inc. said that one plausible theory is that ATMs in the NYC area were subject to software attacks. "This has happened before with certain brands and types of ATM machines," she said. "So Citi decided to limit the damage by limiting withdrawal amounts across the board."

She also said that while media reports have suggested that only NYC customers were impacted, it is quite possible that Citi's actions were not limited to the city.

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