Citigroup pays US$1.1b to settle claims over mortgage bonds
US lender seeks to curb liabilities tied to crisis with accord over mortgage bonds
Citigroup agreed to pay US$1.13 billion to settle claims from mortgage-bond investors as it seeks to curb liabilities tied to the financial crisis.
It took a US$100 million first-quarter charge.
The 68 securitisation trusts covered by the settlement issued a combined US$59.4 billion in mortgage-backed securities from 2005 to 2008, the New York-based bank said in a statement on Monday.
This settlement resolves a significant legacy issue from the financial crisis
The agreement covered 18 investors represented by Gibbs & Bruns and trustees had until June 30 to accept the deal, the law firm said in a separate statement.
The accord must be approved by the Federal Housing Finance Agency.
Citigroup, the third-biggest bank in the United States, is resolving a portion of liabilities tied to mortgages it packaged and sold to investors in the run-up to the 2008 crisis.
JP Morgan Chase and Bank of America, the two largest US lenders, previously agreed to multibillion-dollar settlements with Gibbs & Bruns clients.
"This settlement resolves a significant legacy issue from the financial crisis and we are pleased to put it behind us," Citigroup said.
The bank, led by chief executive Michael Corbat, had been told by the law firm that its clients held certificates in 110 trusts, according to an annual filing with the Securities and Exchange Commission.
The 18 investors include Goldman Sachs, BlackRock and Pacific Investment Management.
The agreement would release Citigroup's obligation to repurchase loans sold to the trusts, the bank's statement said. It does not prevent investors from claiming misrepresentations on offering documents or other potential regulatory actions.
The bank is set to report first-quarter earnings on Monday next week. It is expected to post adjusted earnings of US$1.15 per share, according to the average estimate of analysts surveyed.
Shares in Citigroup have fallen 10.7 per cent this year, lagging the 1.9 per cent advance for the KBW Bank Index.
