Image caption Citibank has rejected the claim made by the Lehman trustee

The trustee handling the liquidation of the collapsed US investment bank Lehman Brothers has taken legal action against Citibank.

The trustee is seeking to recover cash and assets worth about $1.3bn (£800m).

The main part of the claim relates to a $1bn deposit demanded by Citibank in return for continuing to provide foreign exchange settlements after Lehman filed for bankruptcy in 2008.

Citibank said the claim was "unjustified and without merit".

In addition to the $1bn deposit, the trustee is also seeking to recover $300m of deposits that Citibank froze at the time.

Citibank said the sums had gone towards covering losses resulting from the Lehman collapse, with the rest being offset against other obligations Lehman had to Citi.

Last month Citigroup, which owns Citibank, acknowledged that it could face claims to the tune of some $3bn from Lehman's bankruptcy proceedings.

Lehman deposited $2bn with Citigroup in June 2008, before its collapse in September. The money has not been recovered.

The collapse of Lehman Brothers sparked a financial crisis and a global recession that is still proving painful for people and companies across the globe.