Citigroup says it has reached an agreement with a group of 18 institutional investors to pay $US1.125 billion ($A1.22 billion) to settle claims on some mortgage-backed securities sold ahead of the financial crisis.
Citi said on Monday the agreement releases it from an obligation to repurchase mortgages sold into 68 mortgage trusts. The 68 trusts issued $US59.4 billion in residential mortgage securities during 2005-2008.
Leading banks have been settling a huge number of suits tied to the sale of mortgage-backed securities before the housing market tanked in 2007 and 2008. Many of the disputes concern securities linked to low-quality, sub-prime mortgages.
“This settlement resolves a significant legacy issue from the financial crisis and we are pleased to put it behind us,” Citi said in a statement.
The 18 institutional investors were represented by Houston law firm Gibbs & Bruns, which announced similar settlements previously with JPMorgan Chase and Bank of America.
The group of institutional investors includes affiliates of BlackRock and Goldman Sachs, among others, Gibbs & Bruns said in a statement.
The settlement must be approved by the Federal Housing Finance Agency and trustees of the 68 trusts.
Citi said the agreement will result in a $US100 million charge in the first quarter.