Citi to Cut More Jobs, Settle Lehman Dispute: Report
Citigroup is on track to cut 300 sales and trading jobs globally this year, as part of its plan to streamline its banking operations, The Wall Street Journal reported, citing people briefed on the process.
Separately, Citigroup agreed to pay $360 million to the brokerage estate of Lehman Brothers to resolve a dispute over $1 billion in collateral that the investment bank was forced to post in the days leading up to its bankruptcy in 2008.
The sales and trading unit of the bank employs about 17,000 people, the Journal said.
A Citigroup spokeswoman declined to comment specifically on the latest round of cuts, but said the company had "been making targeted headcount reductions throughout the year in certain businesses and functions across Citi as part of our efforts to control expenses during the current environment," the Journal said.
U.S. banks have resorted to measures like jobs cuts and shutting down of branches amid lower mortgage rates and pressure from government agencies to buy back bad loans made during housing boom of the previous decade before the financial crisis erupted in 2008.
Reuters could not immediately reach Citi for comment.
Citi to End Lehman Dispute
According to a settlement reached on Friday with the trustee liquidating Lehman Brothers's U.S. brokerage unit, Citigroup will also relinquish its claim to $75 million that was contingently paid to the estate at the beginning of the liquidation, court documents showed.
The trustee, James Giddens, filed the claim against Citigroup and its subsidiaries early last year, arguing that the $1 billion was obtained under coercion and that the amount should be part of a general asset pool to be divided among creditors in accordance with bankruptcy law.
Citigroup had countered the trustee's claims saying that it is entitled to keep the $1 billion under the Bankruptcy Code's "safe harbor" provisions, which shield certain financial transactions from being included in the creditors' asset pool.
"For the benefit of customers and other creditors, we continue to resolve disputes and marshal assets for the estate, and this agreement accomplishes both," Giddens said in a statement.
In a New York court filing, Giddens said that the protracted litigation over the collateral dispute, along with associated legal costs, would not be in the best interests of the Lehman estate. Lehman's agreement with Citigroup is subject to court approval.
Lehman emerged from bankruptcy in March, and has paid out or plans to pay out $33 billion of an expected $65 billion to creditors, recovering an average of 21 cents on the dollar. The company is also being wound down.
In October, the U.S. brokerage unit and a European unit of the former Lehman Brothers Holdings said they settled litigation over $38 billion of asset claims, a major step toward customers and creditors recovering money.
The cases are In re: Lehman Brothers Inc, U.S. Bankruptcy Court, Southern District of New York, No. 08-01420; and In re: Lehman Brothers Holdings Inc in the same court, No. 08-13555.