Citigroup reaches $1.23B settlement with investors over mortgage-backed securities

Citigroup reaches $1.23B settlement with investors over mortgage-backed securities

Banking major Citigroup has agreed upon a $1.13bn settlement with investors who wanted the company to buyback faulty residential mortgage-backed securities, totalling billions of dollars.

Citi will pay $1.13bn (£681m, €823m) to settle demand from a group of 18 institutional investors to repurchase securities sold to 68 Citi-sponsored trusts, which bundled about $59.4bn in home loans into securities from 2005 to 2008.

Nevertheless, investor claims over misrepresentations in the offering documents associated with the securities will remain. The 18 investors include Goldman Sachs Group, BlackRock and Pacific Investment Management.

The settlement is subject to approval by the trustees of the 68 trusts and the US Federal Housing Finance Agency.

As a result of the settlement, Citi will book a $100m charge in its first quarter results.

“This settlement resolves a significant legacy issue from the financial crisis and we are pleased to put it behind us,” Citigroup said in its statement.

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