Mar 29, 2018

Barclays agrees to pay $2bn to settle US mis-selling claims

Barclays has agreed to pay $2bn to settle claims it mis-sold residential mortgage-backed securities before the financial crisis, winning a gamble by the British bank that it could negotiate a lower penalty by standing up to US authorities. The US Department of Justice said on Thursday the investment banking arm of Barclays had "Caused billions of dollars in losses to investors" by misleading them about the quality of mortgages in 36 RMBS deals. It is in some respects a victory for Barclays, which had refused to settle alongside two European rivals in late 2016, when it dug in against the DoJ's initial demands for it to pay more than $5bn. It also indicates that the DoJ is taking a less hardline approach to the banks under the administration of US president Donald Trump than it had been under the Obama administration. At the end of 2016, Barclays refused to agree a settlement with the DoJ that was not in proportion with those already reached by its US rivals, and decided it was willing to go to court to fight more costly US demands. Barclays felt it should pay a fine of only about $1bn if its settlement was to be proportional with those of its US rivals.

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