Citigroup and UBS settle deal on payback
Investors with auction-rate securities from Citigroup and UBS can now be sure they will get their money back if they haven't already.
Under final settlements announced Thursday with regulators that include the Securities and Exchange Commission, New York Attorney General Andrew Cuomo and state securities regulators, the two banks agreed to buy back billions of dollars of illiquid auction-rate securities from hundreds of customers. Those customers have been unable to sell the securities, which they thought were as good as cash.
Citigroup already has bought back $6.2bn (€4.6bn) of auction-rate securities out of an estimated $7bn covered by the settlement. The New York bank is working to clean up problems for clients that have more than $10m at Citigroup, said a company spokesman.
On October 31, UBS started to make a dent in paying back $8.3bn of auction-rate securities held by its private clients. Thus far, the Swiss bank is buying back auction-rate securities for clients or charities with $1m or less in money held at the firm. Starting in January, UBS will begin buying back the securities from clients with more than $1m at the firm. UBS has until 2010 to buy back the $10.8bn of securities held by larger clients.
UBS declined to specify exactly how much it has bought back so far.
The remaining 10 firms that have agreed with Cuomo and state securities regulators to buy back more than $40bn of auction-rate securities from customers will finalize agreements soon as well, said a spokesman for Cuomo.
Four banks haven't finalized deals with the SEC, including Bank of America, Royal Bank of Canada, Merrill Lynch and Wachovia Corp. They have agreed to repurchase a total of nearly $25bn in auction-rate securities.
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