Barclays agrees $2bn fine in United States for mortgage misselling

Barclays has reached a settlement after allegations it misrepresented securities it sold from 2005 to 2007

Barclays has reached a settlement after allegations it misrepresented securities it sold from 2005 to 2007

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.

The final deal is lower than the $5 billion sum that the USA authorities had asked Barclays to pay earlier in negotiations, as reported back in 2016.

The department's complaint involved 36 residential mortgage-backed security deals, which made $31bn of subprime and Alt-A loans tradable on the market.

"The substantial penalty Barclays and its executives have agreed to pay is an important step in recognizing the harm that was caused to the national economy and to investors in (residential mortgage-backed securities)", said Richard Donoghue, the U.S. Attorney for the Eastern District of NY.

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Before the Barclays deal, the USA regulators had already fined several major banks more than $50 billion over their dealings in mortgage-backed securities.

Deutsche Bank and Credit Suisse reached similar crisis-related settlements late past year.

It said that in general, the borrowers whose loans backed the deals were "significantly less creditworthy" than Barclays represented, and the loans defaulted at exceptionally high rates early in the life of the deals.

Prosecutors say that between 2005 and 2007 Barclays sold investors packages of mortgages that were worth less than the bank claimed, costing the investors billions of dollars.

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Menefee, who was the head banker on Barclays's subprime RMBS securitizations, "has always maintained that the government's FIRREA lawsuit against him was baseless", his lawyers said in a statement, referring to the statute under which the case was brought.

"I am pleased that we have been able to reach a fair and proportionate settlement with the Department of Justice", Barclays CEO Jes Staley said in a statement issued by the bank.

Pre-tax profits rose 10% to £5.3bn for 2017, but the bank reported an after-tax loss of £1.9bn. The British group agrees to make a disbursement of 2 billion dollars (1.623 billion euros).

Mr Staley said by "putting significant legacy matters" behind it as well as completing its restructuring previous year, Barclays was "well positioned to produce stronger earnings going forward".

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For RBS, which remains more than 70% taxpayer-owned, a long-awaited settlement will be a hugely significant milestone as the beleaguered bank aims to return to normality by re-starting dividend pay-outs, making it easier to start returning the lender to the private sector.

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