Barclays pays $20m to settle US class-action lawsuit over Libor fixing

Libor underpins hundreds of trillions of dollars of transactions and is used to set interest rates on mortgages

Barclays agreed to pay almost $20m (£12m) to settle a US class action lawsuit which alleged the bank manipulated the Libor interest rate, according to court papers filed in New York on Wednesday.

The proposed agreement is thought to be the first settlement of private litigation in the United States against a number of banks accused of manipulating the London Interbank Offered Rate.

“Barclays is pleased to have reached an agreement to settle in this matter – it is a step forward in resolving another legacy issue,” said Kerrie Cohen, a spokeswoman for Barclays in New York.

The settlement, which must be approved by a federal judge, follows earlier deals in 2012 by Barclays to pay $453 million to settle investigations by US and UK authorities related to Libor.

Christopher Lovell, a lawyer for the plaintiffs, told Reuters the deal “is a good ice breaker settlement for the class and will provide helpful cooperation in continuing to prosecute the claims against the remaining defendants.”

US and British authorities have charged several people and extracted billions of dollars in fines from banks stemming from alleged manipulation of Libor and related rates.

Barclays class-action settlement covers anyone who transacted in Libor-based Eurodollar futures contracts or options on exchanges such as the Chicago Mercantile Exchange between 1 January 2005, and 31 May 2010.

Barclays has agreed to co-operate with the plaintiffs, who hope that information Barclays provides will help to resolve claims against other banks.

Libor underpins hundreds of trillions of dollars of transactions and is used to set interest rates on financial products such as credit cards, student loans and mortgages.

During Barclays’ 2012 settlement it emerged that broader manipulation of Libor by a number of banks between 2005 and 2009 meant that millions of borrowers paid too little or too much interest on their debt.

At that time, the US government implicated senior executives at Barclays in its settlement. It cited emails that appeared to show how Barclays sought to move Libor rates to profit on trades and to hide its high borrowing costs during the financial crisis.