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Barclays settles with DoJ ahead of schedule, shares spike higher
Barclays has settled its long-running case with America's Department of Justice over its alleged conduct involving mortgage-backed securities in the run-up to the Great Financial Crisis ahead of schedule.
The lender has agreed to pay the DoJ $2.0bn (£1.42bn) in civil penalties in exchange for the dismissal of the US government's ammended complaint.
Just the day before, analysts at Credit Suisse had pegged the quantum of the settlement at £1.5bn, telling clients it expected litigation with the DoJ to conclude in the backhalf of 2018.
In a research note sent to clients, analyst Claire Kane also indicated the settlement would allow Barclays to proceed with the buyback of preference shares.
The complaint in the action had alleged that the lender "misled" investors about the quality of the mortgage loans backing 36 deals involving so-called residential mortgage backed securities.
"It alleged violations of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), based on mail fraud, wire fraud, bank fraud, and other misconduct," the DoJ said in a statement.
Combined, two former Barclays executives named as defendants in the suit agreed to pay $2.0m in civil penalties in exchange for the dismissal of the claims against them.
Barclays was next set to update investors, on its first quarter performance, on 26 April.
As of 1422 BST, shares in Barclays were trading 0.34% higher to 206.7p, having spiked to 207.85p immediately following the news from an intra-session low of 204.15p.