In the attempt to control the liabilities related to the financial crash, Citigroup Inc. © accepted to settle claims from mortgage-bond investor: the bank agreed to pay $1.13 billion. According to a Citibank report, the 68 securitization corporations under the settlement, issued a combined $59.4 billion in mortgage-backed bonds, over the 2005-2008 period (i.e. up to the financial crisis). 18 investors are part of the agreement, and they are represented by Gibbs & Bruns LLP and trustees. They can accept the offered deal by June 30. The pact also needs to pass the approval of the Federal Housing Finance Agency.
The settlement represents one of the actions undertaken by Citigroup (the third biggest bank in the United States) to resolve part of the liabilities related to the loans the bank bundled and sold to investors in the years up to the 2008 market crash. JPMorgan Chase and Co. (JPM) and Bank of America Corp. (BAC) previously reached a multi-billion dollar agreement with the investors represented by Gibbs & Bruns. With this settlement, Citigroup is trying to put behind some of the residues of the financial crisis,that has somehow tarnished their reputation.
Who are the investors?
Some of the most prominent names in the list of 18 investors are BlackRock Inc., Pacific Investment Management Co., and Goldman Sachs Group Inc. According to the bank’s statement, the settlement would release Citigroup from buying back mortgages they had sold to the corporations. However, investors are free to claim misrepresentations on offering documents or other possible administrative issues.
On April 14, the bank was due to present the first-quarter earnings report. Citigroup dropped 1.2% to $46.55 in the NY market, diminishing its former 1.9% advance for the KBW Bank Index.