Citigroup pays subprime fine to shareholders

Published:  30 Aug at 12 PM

Shareholders in US banker Citigroup have been awarded £370 million because of the subprime disaster which was one of the catalysts for the global financial crisis four years ago. Stockholders in the company believe they were not given enough information about just how exposed Citigroup was to toxic mortgages.

Although the banker has agreed to pay the money, it has not said that it accepts the allegation. According to the firm the money has been paid out to avoid further costs. A class action was brought against the bank by shareholders. They believe they were not given sufficient details and were mislead by disclosures from the company in 2008.

Following the financial crash, Citigroup lost $27.7 billion and the banker’s share prices are significantly lower than they ever were before the crisis.

Similar settlements have been made by other banks. Wells Fargo paid out $590 million in 2010, and Bank of America submitted to paying out a settlement worth $601.5 million.

Citigroup has issued a statement in which it says it hopes that the financial agreement will bring it closer to resolving the outstanding damages stemming from the 2008 financial disaster. The bank also claims that it has overhauled its risk management and returned to basics. The fine will be paid out of a pot laid aside for litigation.