Barclays Plc, Britain's third-biggest bank, said on Friday it would pay $144 million in cash to settle a litigation dispute with bankrupt US energy company Enron Corp.
Barclays said it had agreed to a negotiated settlement of the claims, because "it was preferable to the time, expense and unpredictability of litigation", in a deal taking it closer to drawing a line under its exposure to the Enron scandal.
The bank denied any wrongdoing or liability and said the settlement with the Enron estate allows it to continue to seek claims filed in the bankruptcy totalling $310 million.
Enron, once the seventh-largest US company, collapsed in December 2001 after a complex system of hiding debt and inflating profits was uncovered. The second-largest bankruptcy in US history prompted Enron shareholders and bondholders to file lawsuits against several banks, alleging they had helped executives to orchestrate the fraud.
Enron said the agreement with Barclays was the ninth settlement with a financial firm and reflected its "determination to resolve the litigation and continue to deliver value to creditors as quickly as possible". Barclays said the settlement would have no impact on its earnings in 2006, because an adequate provision had already been made for the likely cost in prior periods.
By 1540 GMT its shares were down 0.3 percent at 697 pence, valuing the bank at just over 45 billion pounds ($85.8 billion). Settlements with the Enron estate have typically been far smaller than in class action cases. J.P. Morgan Chase agreed to pay $350 million, and several other banks paid smaller amounts to settle with the estate.
A separate civil lawsuit has netted more than $7 billion, including $2 billion or more from each of Canadian Imperial Bank of Commerce, J.P. Morgan and Citigroup. In July a court dismissed the civil lawsuit against Barclays, but the plaintiffs are appealing the ruling.
Royal Bank of Scotland, Britain's second-biggest bank, settled its case with the estate of Enron in June 2005 for $42 million, although it got $20 million back to drop its claims against Enron. RBS is still defending itself against an Enron class action suit. At its half-year results in August, it said it had substantial and credible legal and factual defences to the claims and it would defend itself vigorously.