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US investment bank Citigroup is to pay $730m (£484m) to settle a class-action suit by bondholders brought over the financial crisis. The suit alleged Citi misled buyers of its bonds over its exposure to subprime mortgages and other high-risk securities between 2006 and 2008. Citi denied the claims, but said it agreed to the settlement to "eliminate uncertainties". In August 2012, Citi struck a $590m settlement with shareholders. Bondholders claimed that Citi not only misrepresented its exposure to mortgage-backed assets, but also understated losses on loans. But the bank said in a statement: "Citigroup senies the allegations and is entering into this settlement solely to eliminate the uncertainties, burden and expense of further protracted litigation. "This settlement is another significant step toward resolving our exposure to claims arising from the financial crisis, and we look forward to putting this matter behind us. Citi is a fundamentally different company today than at the beginning of the financial crisis." The settlement must be approved by the US district court. In August 2012, Citi announced a $590m settlement with investors who claimed that the company had hid its exposure to the collateralised debt obligations market to prop up its share price. The investors suffered heavy losses when Citi's shares eventually fell. In that case, Citi also denied the allegations and said it was settling to avoid any more legal costs. Link: http://www.bbc.co.uk/news/business-21839793
Citigroup and Bank of America Merrill Lynch reported disappointing fourth quarter profits on Thursday, as the sub-prime mortgage crisis that unravelled more than five years ago continued to hinder two of the country's biggest lenders. Citigroup, the third-biggest US bank by assets, reported earnings of $1.2bn (£750m) in the final three months of the year, or 38 cents per share. That compares with $933m in the same period a year earlier. Excluding one-off factors, related to restructuring and accounting for outstanding debt, the bank earned 69 cents per share, well below the 97 cents per share analysts had expected. In his first set of quarterly results since taking over the role of chief executive from Vikram Pandit in October, Michael Corbat said the environment remained "challenging" and that the bank continued to deal with "legacy issues". "It will take some time to work through the challenges of the current environment but realizing our core earnings potential, as well as improving our returns on assets and tangible equity, are critical goals going forward," he said in a statement. Link: http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9808807/Citigroup-and-Bank-of-America-profits-hit-as-mortgage-clean-up-continues.html
Citigroup has agreed to pay $590m (£373m) to investors who allege they were misled about the scale of the bank’s ownership of troubled mortgage debt before the financial crisis. The class-action suit, which was filed in New York in 2009, accused Citi of employing a “CDO-related quasi-Ponzi scheme” to conceal the growing risks on its balance sheet from the mortgage-backed debt and collateralised debt obligations (CDOs) it owned. Citi told the investors that the CDOs had been sold when, in fact, the bank still remained liable for any losses the products suffered, the lawsuit claimed. The settlement is one of the largest to emerge from the financial crisis and comes almost four years after Citi turned to the US taxpayer for a $50bn bail-out. Fears about the health of the bank’s balance sheet had sent its shares tumbling following the demise of Lehman Brothers in September 2008, eventually forcing then US Treasury Secretary Hank Paulson to step in. More: http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9507449/Citigroup-pays-373m-to-settle-debt-claims.html