Citi (C) to Pay $1.12 Billion to Settle Legacy Securities Claims

Citigroup (C) has reportedly reached an agreement to resolve a lawsuit surrounding certain private label mortgage securities, Reuters reports.

Citing a deal the bank reached with 18 institutional investors, the publication states the New York-based firm would pay $1.12 billion in cash to end legacy securities and other claims and induce a related charge of $100 million in Q1.

The new settlement, offered by Citi to the 68 Citi-sponsored MBS trusts that participated in the $ 59.4 billion residential mortgage-backed securities, resolves a significant legacy issue left over from the financial crisis.

Citi released the following statement on the legacy securities deal:

“This settlement resolves a significant legacy issue from the financial crisis and we are pleased to put it behind us.”

The agreement would not release potential investor claims relating to alleged misrepresentations in the offering documents associated with these private-label securitizations, nor any potential regulatory actions. Further, the agreement does not cover mortgage loans sold through private-label securitization trusts via Citi’s consumer mortgage business in CitiMortgage, Inc. The agreement is conditioned on, among other things, acceptance by the trustees of the applicable trusts, and court approval, if sought by the trustees.

Citi, the leading global bank, has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. Citi provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services, and wealth management.”

Citigroup stock closed down 56 cents, or 1.19 percent, at $46.55 on the New York Stock Exchange on Monday.

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