Citi releases $2.5bn in Lehman assets
US bank Citigroup has agreed to release more than $2.5bn (£1.6bn) of assets to the European arm of the Lehman Brothers estate to be divided among the failed banks’ creditors.
Citi has negotiated a deal with PricewaterhouseCoopers, the administrators of Lehman Brothers’ European estate, to release the assets from its custody business.
It will begin transferring the assets to Lehman Brothers International (Europe) immediately and will be paid custodian fees through the settlement.
“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,” said Paul Copley, a restructuring partner at PwC.
Citi was Lehmans’ custodian in several European countries and the failed bank entered into a large number of lending, trading and derivatives transactions with Citi before it collapsed.
Its demise in 2008 prompted Citi to keep the assets after it filed for bankruptcy. Citi has been assessing its exposure to the European part of the business and other entities globally, the two parties said.
“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,” Citi said in a statement.