“We have made mistakes,” JP Morgan Chase said in a letter to Robert Morgenthau, the Manhattan district attorney. It added: “We cannot undo what has been done. But we can express genuine regret.”

Charles Prince, Citigroup’s incoming chief executive, was similarly contrite. He said: “I want to assure you, both personally and on behalf of Citigroup, that the Enron transactions do not reflect our current standards and they would not happen now, and will not happen in the future.”

However, neither of the banks, which were required to make the statements of mea culpa as part of the financial settlement yesterday, face criminal charges. Mr Morgenthau said he “could not prove intent to defraud people”.

Before the collapse of the global energy trader in December 2001 it had annual revenues of more than $100 billion.

In the settlement, as part of a deal with the US Securities and Exchange Commission, the market regulator, JP Morgan Chase agreed to pay $135 million. The money will cover compensation for investors, a fine and interest. Citigroup will pay a total of $120 million, of which $101 million is related to Enron. The remaining $19 million goes on settling similar claims relating to its conduct in the Dynegy debacle, another energy company. Both banks will also pay $25 million and costs to Mr Morgenthau.

Neither of the banks admitted or denied wrongdoing.

Most of the money will reimburse investors, but lawyers said it was a drop in the ocean. Jake Zamansky, a New York securities lawyer, said: “The banks are getting away with murder. Investors are getting $236 million? That's a pittance. These folks lost $50 billion.”

Nevertheless, the settlement could be of some help to investors suing the banks as it might assist them in proving that the banks wronged them. Michael Bachner, another securities lawyer, said: “A bank doesn’t pay a $135 million fine for nothing.” But he added that the fact there were no criminal findings would not help the investors’ case.

Regulators said JP Morgan Chase engaged in so-called “pre-pay” transactions with Enron, which amounted to loans disguised as commodity trades that allowed Enron to achieve its reporting objectives. The deals worked like this: Enron passed the commodity price risk to a JP Morgan special purpose entity, which then passed it back to Enron. Enron received cash up front at a set interest rate; the only risk was JP Morgan’s credit risk if Enron did not pay the money back.

Citigroup engaged in similar pre-pay transactions. In one of these, called Project Nahanni, Citigroup allegedly helped Enron to present a rosier financial picture by providing a loan to buy Treasury bills, which it then sold. Another deal, Pro-ject Bacchus, centred on a $200 million financing from Citigroup, made to look like a sale of an interest in some of Enron’s pulp and paper business.

The regulators said that in helping Enron with these complex structures the banks were enabling it to mislead investors and ratings agencies.

The SEC said that it had so far collected $324 million in compensation for victims of the Enron fraud. It also said its investigations of Enron and Dynegy were continuing.