Citigroup Inc (NYSE:C) has filed a lawsuit against Barclays PLC (NYSE:BCS) (LON:BARC) in connection with losses sustained after the collapse of Lehman Brothers Holdings Inc. (OTCMKTS:LEHMQ). Bloomberg’s Bob Van Voris reports that the $141 million suit claims that Barclays would not indemnify its Citibank unit for the losses related to the foreign exchange settlement services provided to Lehman Brothers Holdings Inc. (OTCMKTS:LEHMQ).
Citigroup Claims Barclays Breeched Their Agreement
The suit was filed on Monday in federal court, and Citigroup Inc (NYSE:C) said the losses incurred were because it extended credit to Lehman at the request of Barclays PLC (NYSE:BCS) (LON:BARC) during the week right after Lehman’s bankruptcy filing in 2008. Citigroup said it handled settlements for foreign exchange trades as Barclays worked on purchasing Lehman’s broker-dealer division in the U.S.
According to Citigroup Inc (NYSE:C), Barclays said it would indemnify it for the losses it incurred in relation to settlements between Sept. 17 and 19 in that year. The suit said Citibank has repeatedly demanded that Barclays PLC (NYSE:BCS) (LON:BARC) honor its agreement for indemnity, but Barclays has thus far refused. Citigroup now wants Barclays to honor its offer.
Reuters’ Jonathan Stempel reports that Citigroup Inc (NYSE:C) claims $580 million in losses during that time frame, although it has lowered that amount to $90.8 million. The $141 million it seeks in the lawsuit includes that amount plus the legal fees and interest on the amount, which Citigroup said should be covered by the indemnity.
At this point the bankruptcy of Lehman Brothers Holdings Inc. (OTCMKTS:LEHMQ) is still the biggest one in U.S. history, and it was one of the main contributors of the global financial crisis in 2008. Citigroup was one of the banks that was bailed out by the U.S. government, although it has repaid the bailouts.