Citi is the last of 11 banks to settle with Enron creditors in litigation known as 'MegaClaims,' and its payment is the largest. Enron had sought US$21 billion from the bank. The MegaClaims suit was first filed in 2003, and settlements began in July 2005.

In total, the litigation will return about US$5 billion to creditors, they said in a statement. Creditors have received about 37 cents on the dollar, a spokesman said.

Citi said its legal reserves, which stood at US$2.8 billion at the end of 2007, will cover the payouts. It denied wrongdoing, and said it was settling to avoid the expense and uncertainty of protracted litigation. A trial was slated to begin in April 2008.

The settlement clears up one of the few remaining unresolved issues that Citi had from a credit crunch earlier this decade, but the current credit crisis is still weighing on the largest US bank.

Writedowns
Meredith Whitney, an analyst at Oppenheimer & Co, wrote on Tuesday that Citi would likely record US$13.12 billion of writedowns for the first quarter, mainly from collateralised debt obligations. She estimates a loss of US$1.15 per share for the quarter.

Under the MegaClaims litigation, Enron's estate argued that financial institutions were complicit in the fraud that led to Enron filing for bankruptcy in December 2001. After Citi, the biggest payout for a settlement was from JPMorgan Chase & Co, which paid US$982 million and gave up US$83 million of claims.

The creditor group said that in addition to the payment, Citi has agreed to waive and release additional claims.

The settlement is subject to court approval.

Citigroup shares fell US$1.37, or 5.85 per cent, to US$22.05 on Wednesday on the New York Stock Exchange. -- REUTERS