NEW YORK (Reuters) - Citigroup Inc (C.N) has agreed to pay Enron creditors $1.66 billion to settle a lawsuit over its responsibility in the energy trading firm’s downfall, a group representing creditors said on Wednesday.
The largest U.S. bank is also giving up $4.25 billion of claims against Enron, while Enron is releasing all claims against Citi. The bank said in a statement that it denies wrongdoing, and agreed to the settlements solely to avoid the expense and uncertainty of litigation.
The $1.66 billion payout represents about 60 percent of the $2.8 billion Citi has set aside for legal payouts in litigation reserves. Citi said in its annual report that it believes its reserves are adequate to cover its exposure.
Citi is the last of 11 banks to settle with Enron creditors in litigation known as “MegaClaims,” and its payment is by far the largest.
The MegaClaims litigation is returning over $5 billion to Enron creditors, the creditors said in a statement.
By settling, Citi is avoiding a trial, which was slated to start this year. Citi said in its annual report that it had $2.8 billion reserved for legal settlements.
The creditor group said that in addition to the payment, Citi has agreed to waive and release additional claims.
Reporting by Michael Erman; editing by Brian Moss and John Wallace