Citigroup may pay $7 billion to resolve U.S. mortgage probes: source
By Karen Freifeld and Aruna Viswanatha
NEW YORK/WASHINGTON (Reuters) - Citigroup Inc is close to paying about $7 billion to resolve a U.S. probe into whether it defrauded investors on billions of dollars worth of mortgage securities in the run-up to the financial crisis, a source familiar with the matter said on Tuesday.
A majority of the settlement is expected to be in cash, but the figure also includes several billion dollars in help to struggling borrowers, the source said.
An announcement of the settlement between the bank and the U.S. Department of Justice could come as early as next week, the source said.
A Citigroup representative declined comment. A Justice Department spokeswoman did not respond to requests for comment.
A settlement of around $7 billion for Citigroup would be higher than analysts had expected based on the bank's mortgage securities business.
Some Wall Street analysts had previously estimated that Citigroup likely had about $3 billion of reserves set aside for a related settlement. U.S. authorities had demanded more than $10 billion last month, Reuters reported.
Talks between U.S. authorities and Citigroup stalled last month after both sides stood far apart on a settlement figure and the Justice Department had prepared to sue the bank.
The bank is scheduled to report second-quarter results on Monday. Analysts, on average, have estimated the company would earn $3.4 billion. Continued...