Barclays to pay $2bn fine to settle mis-selling probe

Remembering one of the darkest days in financial history

Jes Staley, its chief executive but was not at the bank at the time of the RMBS sales, said: "I am pleased that we have been able to reach a fair and proportionate settlement with the Department of Justice".

Barclays shares were trading 0.7 per cent up at 1332 GMT following news of the settlement.

Barclays Capital and some of its affiliates have agreed to pay a hefty $2 billion fine for improperly selling securities backed by home mortgages, according to a report. "We are proud to have partnered with the U.S. Department of Justice and the U.S Attorney's Office for the Eastern District of NY on this matter".

"The settlement is at the bottom end of expectations and has come sooner than expected, so this is a good outcome for Barclays", Ian Gordon, analyst at Investec Bank in London, said.

The $2 billion penalty is less than the settlements reached by Goldman Sachs, JPMorgan Chase and other major banks over their pre-crisis mortgage deals.

The settlement resolves the British bank's largest outstanding legal issue in the United States, and could offer reassurance to investors who had been braced for a potentially larger fine.




"This is marginally good news, broadly in line with the figure that they are purported to have offered in 2016, prior to the change in USA administration", said Edward Firth, an analyst at Keefe, Bruyette and Woods in London. The bank's leader, Ross McEwan, has told investors he is hoping to settle the probe this year.

Barclays and its CEO aren't out of the woods yet. Additionally, the U.K.'s Serious Fraud Office has charged the firm over its fundraising from the Middle East at the height of the financial crisis.

Barclays has agreed a $2bn (£1.4bn) settlement with the US Department of Justice over claims that it mis-sold mortgage-backed securities in the run-up to the financial crisis.

The scheme alleged in the complaint involved 36 RMBS deals in which over $31 billion worth of subprime and Alt-A mortgage loans were securitized, more than half of which loans defaulted. Barclays has said it intends to defend itself in court on those charges as well. "Today's settlement holds accountable those who waste, steal or abuse funds in connection with FHFA or any of the entities it regulates". The U.S. claims that the borrowers whose loans backed these deals were significantly less creditworthy than Barclays represented, leading to high rates.

The settlement comes almost a month after Barclays confirmed a loss of almost £2bn previous year, after a string of hefty charges, including a £900m from Donald Trump's corporate tax changes and £127m from the collapse of the outsourcing and construction firm Carillion.

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