US banking giant Citigroup is to pay $1.66bn to settle a lawsuit brought by Enron's creditors over the collapse of the energy firm in 2001.
The bank is also giving up $4.25bn of claims against Enron, while Enron is releasing all claims against Citigroup.
The bank said in a statement that it denied wrongdoing and agreed to the settlement to avoid "the uncertainties and expense of litigation".
The collapse of Enron, once one of the US's largest energy firms with ties to the Bush administration, left $40bn in debts and cost thousands of jobs.
At the time the Texas-based firm was the biggest such bankruptcy in US corporate history, leading to the prosecution and jailing of several Enron executives and several high-profile US government investigations.
Andrew Fastow, Enron's former financial chief, is currently serving a six-year sentence for his part in the accounting scandal which led to the fall of Enron.
The creditors had alleged that the banks should bear at least partial responsibility for the energy firm's implosion.
'Megaclaims'
The payout represents about 60 per cent of the $2.8bn Citigroup has set aside for legal payouts in litigation reserves.
The firm had earlier said that it believes its financial reserves are sufficient to cover any settlement.
Citigroup is the last of 11 banks to settle with Enron creditors in a litigation known as "Megaclaims," and its payment is by far the largest.
The litigation will return more than $5bn to Enron creditors, the creditors said in a statement.