Citigroup said it agreed to pay $7 billion to settle a U.S. government investigation into mortgage-backed securities the bank sold in the run-up to the 2008 financial crisis.
The settlement figure was more that twice what many analysts expected earlier this year but less than the $12 billion the government had sought in negotiations with the bank.
Citigroup said it took a related pre-tax charge of about $3.8 billion in the second quarter. Taking the charge into account, the bank reported a 96 percent drop in earnings.
Citigroup's shares were up 3.9 percent at $48.82 in premarket trading on Monday. The stock gained 1.4 percent after the settlement was announced an hour before the results. (Click here for the latest quote.)