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Citi edges down as bank agrees $1.1 bln mortgage settlement

Published: 10:19 08 Apr 2014 EDT

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Citigroup Inc. (NYSE:C), the third-biggest U.S. bank, dropped in morning trading after saying it agreed to pay $1.12 billion to settle claims from mortgage-bond investors and  incur a related charge of $100 million in the first quarter.

Citigroup Inc.ed down 0.3 percent to $46.40 at 10:15 a.m. in New York, extending this year's losses to 11 percent.

The New York–based bank said in a statement late yesterday that it reached the agreement with 18 institutional investors, adding that the settlement had resolved a significant issue left over from the financial crisis. 

Citi has offered the settlement to the 68 Citi-sponsored mortgage securitization trusts that participated in the $59.4 billion residential mortgage-backed securities. Trustees have until June 30 to accept the deal. 

Citigroup is resolving a portion of liabilities tied to mortgages it packaged and sold to investors in the run-up to the 2008 crisis. JPMorgan Chase & Co. (NYSE:JPM) and Bank of America Corp. (NYSE:BAC), the two largest U.S. 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 in the statement.

Last year, a federal judge approved a settlement in which Citi agreed to pay bondholders $730 million to resolve claims that the bank concealed its exposure to billions of dollars of toxic mortgage assets prior to the financial crisis.

Citi, which has 200 million customer accounts and does business in more than 160 countries and jurisdictions, is slated to report first-quarter earnings on April 14. 

 

 

 

 

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