Citigroup 'could lose $4bn on lawsuits'

28 February 2011

US financial institution Citigroup could be facing further losses running into billions of dollars as a result of legal action left over from the financial crisis of 2008, the firm has suggested.

According to the Wall Street Journal, Citi stated in its latest trading report that it could end up paying out as much as $4 billion to cover costs arising from the events of nearly three years ago as well as a series of other matters.

Rival banks Wells Fargo and Bank of America both have a significant hangover from 2008 - with anticipated costs of $1.5 billion and $1.2 billion respectively - but Citi is still awaiting the outcome of cases brought by shareholders and bondholders.

The firm, which was returned entirely to private ownership after the US government's remaining stake was sold off in December, gave an indication of its ongoing legal costs under a new stipulation laid down by the Securities and Exchange Commission.

Last week, the trustee of disgraced financer Bernard Madoff claimed in a lawsuit that Citi had overlooked numerous red flags relating to his Ponzi scheme as early as 2005.

By Claire Archer

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