By Caroline Binham, Martin Arnold and Jane Croft
Barclays has avoided the potential embarrassment of having its former chief executive Bob Diamond appear in a High Court case by agreeing to settle claims that it mis-sold an interest rate swap to a British care home.
In return for Graiseley Properties dropping its claim against Barclays, the bank said it had restructured the £70m that the owner of Guardian Care Homes owed for the contested interest rate swap.
A trial had been set for this month and witnesses scheduled to give evidence included Mr Diamond as well as Jerry del Missier and Rich Ricci, the former co-heads of Barclays’ investment banking division.
Their appearance was likely to prove uncomfortable for Barclays, as Graiseley had drawn a direct link between the alleged mis-selling of its interest rate swap and the wider global scandal over manipulation of the Libor benchmark.
Barclays was the first to settle with authorities in the sprawling global probe into alleged Libor rigging, paying £290m in June 2012 to US and UK agencies. Mr Diamond lost his job in the aftermath of the settlement following heavy political and regulatory pressure.
The settlement with Graiseley means that documents and extensive email disclosure from Barclays will not be placed in the public domain through a court case. Earlier pre-trial hearings have heard that Barclays might have had to disclose up to 200,000 documents in the trial which could have lasted up to six weeks.
While the settlement was on confidential terms, people familiar with the situation said that the bank agreed to write down the debt owed by Graiseley on the swap. Barclays denied that Graiseley was “getting off scott free” but would not disclose the terms of the debt restructuring.
The landmark case was closely watched by other banks targeted as part of the Libor probe. It was the first to be allowed to proceed through the UK courts that not only included the toxic allegation of interest rate swap mis-selling but also that of rigging the rate that underpinned the swap.
Barclays has at least one similar case in the High Court pending, while Deutsche Bank has another.
The worldwide Libor probe has seen $6.5bn of fines meted out to some of the world’s biggest institutions.
