Barclays pays $298m over US sanctions violations

Barclays bank has agreed to pay a settlement of $298m (£190m) after it violated US sanctions in transactions conducted with Cuba, Iran, Libya, Sudan and Myanmar.

According to US court documents filed yesterday, Barclays has been charged with breaking the International Emergency Economic Powers Act and the Trading with the Enemy Act in dealings worth $500m from 1995 to September 2006.

While a federal judge must still approve the settlement, the UK-based bank and US lawyers have entered into a deferred prosecution agreement over two years. Barclays is reported to have voluntarily disclosed some of the banned transactions to the US authorities and has co-operated fully.

Barclays has agreed to pay $149m to the US government and $149m in a deferred prosecution agreement with New York's district attorney.

However, the settlement is relatively small beer compared to Barclays' bulging profits. This month, Barclays set aside a £1.7bn bonus pool for its staff in the first half of the year as profits surged to £3.9bn. The bonus pool will benefit 150,000 staff, but the lion's share will go to Bob Diamond's investment bankers at Barclays Capital.

The profit figure was up 44 per cent on the same period last year, although it was flattered by accounting technicalities. The bulk of it was generated by Bar Cap, which tripled earnings to £3.4bn. Even after stripping accounting quirks out, Barclays' overall underlying profits were up 22 per cent to £2.9bn.

It said this year's bonus pool looks bigger than usual because deferred money from last year is included in it – under new rules formulated by the Financial Services Authority.