Financial leviathans Citigroup and JP Morgan Chase have embarked on a charm offensive, in an attempt to cleanse the taint of a Congressional inquiry into its involvement with bankrupt energy trader Enron.

Separate from the inquiry, a senator in charge of an investigation into banks' links with Enron has asked Citigroup and JP Morgan Chase to answer questions about their use of offshore companies in their dealings with Enron.

And JP Morgan Chase's links with Enron have led the credit rating agency Moody's Investors Service to reduce its outlook for the bank from 'stable' to 'negative'

Citigroup said it would widen the gap between research and investment banking, and spend almost $2bn in buying back shares.

The moves come after Congressional investigators said Citigroup and JP Morgan Chase let Enron hide its huge liabilities by means of intricate financial structures.

And Thursday saw persistent rumours that the banks are now being probed by the Securities and Exchange Commission (SEC) in addition to Congress.

"In the last few days, our company has been severely criticised for past activities in our corporate and investment bank," Citigroup chairman and chief executive Sanford Weill said in a letter.

"I feel badly and I truly regret the pain that has been caused."

Problems mount

The Enron dealings represent only one of a series of problems besetting Citigroup.

Like some of its rivals, the bank has also come under fire for compromising its research to win investment banking business.

The National Association of Securities Dealers is investigating Jack Grubman, an analyst at Citigroup's Salomon Smith Barney, over inexplicably optimistic ratings on weak telecoms firms.

Meanwhile, JP Morgan Chase has attempted to win over investors in a conference call.

Shares in both banks, which have fallen by about one-quarter already this week, drooped further on Thursday.

Enron links

At Congressional hearings on Monday and Tuesday, JP Morgan Chase and Citigroup were accused of running offshore companies to trade in oil and gas with Enron.

Enron booked proceeds from the deals as cash flow from operations but should have logged them as debt, according to investigators.