Citigroup[/tag] and US authorities will announce a $7 billion agreement as early as today to halt investigations of the bank’s sales of mortgage-backed bonds in the three-year period up to the 2008 financial crash.
Citigroup and US authorities will announce a $7 billion (£4.09 billion) agreement as early as today to halt investigations of the bank’s sales of mortgage-backed bonds, Bloomberg reported.
The bank has been accused of misrepresenting the quality of mortgage-backed paper sold to investors as house prices plummeted. The aftermath of the 2008 financial crash continues to see considerable litigation as disgruntled investors seek to recover something from the financial rubble.
The announcement could come on the day the bank is expected to report second-quarter results. Fellow US banking big-hitter Wells Fargo has already issued latest figures. Other banks are due to issue figures in coming days.
The agreement, which the news service said was signed over the weekend, requires the firm to pay $4 billion to the Justice Department, about $300 million to state attorneys general and about $200 million to the Federal Deposit Insurance Corporation and to provide $2.5 billion in relief for consumers. The news service quoted an unnamed source.
This publication was unable to contact the bank at the time of going to press but will update in due course. The matter does not, at first glance, directly affect Citigroup’s wealth management and private banking businesses although there may be an indirect effect if the overall group’s financial health is affected by any settlement terms.
The report said Citigroup has been among other US lenders, such as Bank of America, that are being probed by the US Justice Department for allegedly misrepresenting the quality of mortgage-backed bonds sold to investors as housing prices plummeted. JP Morgan agreed late last year to pay $13 billion to resolve similar federal and state probes.