Citigroup to pay S$8.6bn to settle US mortgage suits

Citigroup to pay S$8.6bn to settle US mortgage suits

NEW YORK - Citigroup said Monday that it will pay $7 billion (S$6.8bn) to settle charges that it misled investors in its sale of mortgage-linked securities ahead of the financial crisis.

Citi said the settlement with the US Department of Justice and other government bodies resolves "substantially all" of its litigation on mortgages through 2008. The bank will take a $3.8 billion pre-tax charge to cover the settlement.

Under the settlement, Citigroup will pay $4.5 billion in cash and $2.5 billion in consumer relief. The cash component consists of a $4.0 billion civil penalty to the Justice Department.

Consumer relief includes financing for the construction of affordable rental housing and principal reduction.

"We believe that this settlement is in the best interests of our shareholders, and allows us to move forward and to focus on the future, not the past," said Citigroup chief executive Michael Corbat.

Citigroup's settlement follows a $13 billion settlement between Justice and JPMorgan Chase last November on similar charges. The Justice Department has been in talks with Bank of America on a comparable case.

Citi shares rose 1.5 percent to $47.70 in pre-market trade.

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