Bloomberg News

Citigroup, Lehman Europe Settle Over $2.5 Billion in Assets

June 29, 2011

(Updates with Citigroup comment in sixth paragraph.)

June 29 (Bloomberg) -- Citigroup Inc. and Lehman Brothers International Europe reached a settlement over assets valued at more than $2.5 billion that were held for the collapsed investment bank by Citigroup in a number of countries.

Citigroup agreed to immediately begin transferring assets held in custody for LBIE, which it kept while determining how it was affected by Lehman’s collapse, PricewaterhouseCoopers, Lehman’s U.K. administrator, said in a statement. Both parties will drop all claims against each other, PwC said.

“This is by far the largest single deal we have undertaken and easily the most complex to negotiate and then structure, given the sheer scale of the legacy relationship between Citigroup and LBIE,” Paul Copley, a PwC restructuring partner who led the negotiations, said in the statement.

Before going into administration, LBIE and New York-based Citigroup entered into “a large volume” of agreements related to over-the-counter derivatives, stock lending, repurchase transactions, prime brokerage and trading arrangements, both on behalf of the banks and for third parties, LBIE said.

LBIE’s former parent company, Lehman Brothers Holdings Inc., collapsed in September 2008, filing the largest bankruptcy in U.S. history. London-based LBIE is in administration in the U.K. Citigroup and LBIE have “taken steps” to return assets to clients that were held by Citigroup during the administration, according to the statement.

“We have worked closely with the administrators of LBIE and their team for many months to ensure that the arrangements between Citigroup and LBIE were resolved amicably and in a manner which fairly reflected the interests of both parties,” Citigroup spokesman Jeffrey French said in an e-mailed statement.

Lehman Brothers Holdings said in a court filing in New York today that it reached a deal with bondholders, led by hedge fund Paulson & Co., and derivatives creditors including Goldman Sachs Group Inc. and Morgan Stanley on a $65 billion liquidation plan.

--With assistance from Donal Griffin and Linda Sandler in New York. Editors: Christopher Scinta, Anthony Aarons

To contact the reporter for this story: Lindsay Fortado in London at lfortado@bloomberg.net.

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net.


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