£1bn pay-out to Enron investors

IN one of the largest settlements in corporate history, Citigroup today agreed to pay $2bn (£1.01bn) to shareholders of collapsed US energy trading company Enron.

This is by far the biggest settlement in the tangled Enron saga, and analysts said the move is likely to put pressure on other banks involved to come up with their own deals.

The settlement follows a class-action suit by Enron investors, who accused Citigroup of helping Enron to hide its massive debts, and covers all investors who bought publicly-traded Enron equity and debt securities between 9 September 1997 and 2 December 2001.

Citigroup, the world's largest financial organisation, said the settlement was fully covered by its existing litigation reserves. It includes the plaintiffs' legal fees.

It continues to deny any wrongdoing but said it has agreed the deal 'solely to eliminate the uncertainties, burden and expense of further protracted litigation'.

Chief executive Charles Prince said: 'We have an ambitious agenda for Citigroup's future growth as we continue toward our goal to be the most respected global financial services company. It is a key priority for Citigroup to resolve major cases like this one and to put a difficult chapter in our history behind us.'

Enron investors have claimed losses of much as $30bn in the collapse of the energy trading giant. Today's settlement brings to $2.5bn the amount recovered so far.

Citigroup last year paid $2.65bn to resolve claims from investors in WorldCom.