February 20, 2014 / 9:45 PM / in 4 years

Citigroup, Barclays settle lawsuit over losses tied to Lehman

NEW YORK, Feb 20 (Reuters) - Citigroup Inc has settled a lawsuit against Barclays Plc in which it sought to recover more than $141 million for providing foreign exchange services to a unit of Lehman Brothers Holdings Inc during the 2008 financial crisis.

In a letter filed on Thursday with the U.S. District Court in Manhattan, the banks said they had reached an agreement in principle to resolve the case.

Terms were not disclosed. U.S. District Judge Lorna Schofield dismissed the lawsuit without prejudice and gave Citigroup 30 days to refile if warranted.

Barclays declined to comment. Citigroup had no immediate comment.

The case related to Citigroup’s role in the Continuous Linked Settlement system, which was designed to ensure that foreign exchange trades are completed.

Citigroup said it sought to stop settling trades for Lehman’s brokerage unit on Sept. 17, 2008, two days after Lehman filed the largest bankruptcy in U.S. history, because it was incurring large losses.

It said that because Barclays was then buying Lehman’s U.S. broker-dealer business, the British bank urged it to continue the services, and would cover its losses from Sept. 17 to 19.

Citigroup had said Barclays failed to honor this indemnity, causing it to lose $580 million. It later reduced this sum to $90.8 million, and sued for the lowered amount plus interest and legal fees.

The case is Citibank NA v. Barclays Bank Plc, U.S. District Court, Southern District of New York, No. 13-03063.

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