Citigroup Inc. today announced that it has reached settlement agreements resolving the two largest remaining claims against the firm arising out of the collapse of Enron in 2001. Both settlements are fully covered by Citi’s existing litigation reserves.

The Enron Bankruptcy Estate had filed bankruptcy and fraud claims against Citi totaling approximately US$21 billion. Under the terms of the settlement agreement, Citi will pay US$1.66 billion to Enron and withdraw certain claims in the Enron bankruptcy proceeding.

Also, Enron will release all of its claims against Citi and certain other parties. Enron will also allow specified Citi-related claims in the bankruptcy proceeding, including all of the bankruptcy claims of parties holding approximately US$2.4 billion of Enron credit-linked notes. Citi reached a separate settlement agreement resolving all disputes with the holders of the CLNs, including a suit against Citi pending in the Federal District Court in Houston.

The settlements provide that Citi denies any wrongdoing and has agreed to the settlements solely to eliminate the uncertainties, burden and expense of further protracted litigation. The Enron settlement agreements must be approved by the bankruptcy court.

Citi said, “We are pleased to have reached a successful resolution of the two largest outstanding matters dating from the Enron disputes.”

“Today’s settlement marks an enormous accomplishment for the Enron Estate, as it concludes the MegaClaims litigation and allows us to return over US$5 billion to creditors of the Enron Estate, including approximately US$2.1 billion plus interest, gains and dividends to the Yosemite/CLN Trusts claim holders,” said John Ray III, Enron Creditors Recovery Corp. president and chairman.

“I am very proud of the value we have been able to recover on behalf of creditors through the MegaClaims process; reaching an agreement with Citi enables the estate to avoid the costs of protracted litigation, and it accelerates distribution to creditors of significant cash trapped in the estate,” Ray added.