Barclays has agreed a $2bn (£1.4bn) settlement with the US Department of Justice over claims that it mis-sold mortgage-backed securities in the run-up to the financial crisis.
The fine draws a line under a major misconduct issue that had been hanging over the bank after it decide to contest the far higher sum that the DoJ was reportedly seeking.
Barclays chief executive Jes Staley said it was a "fair and proportionate settlement" and it is likely to be seen as a vindication of his decision to play hardball with US authorities.
The DoJ had been thought to be going for a sum closer to the $7.2bn penalty agreed by Deutsche Bank or $5.3bn by Credit Suisse, both at the start of last year, over similar claims.
The department's civil action against Barclays alleged that the bank caused billions of dollars in losses to investors through a fraudulent scheme to sell 36 bundles of toxic mortgage assets between 2005 and 2007.
It was alleged that it misled those investors about the quality of the home loans backing those deals. The DoJ said more than half of the mortgages defaulted.
In addition to the bank's fine, two US-based former Barclays employees have agreed to pay penalties totalling $2m.
Mr Staley said: "I am pleased that we have been able to reach a fair and proportionate settlement with the Department of Justice.
"It has been a priority for this management team from the start to resolve these historic issues in a timely and appropriate manner wherever possible."
Mr Staley said the settlement, combined with the completion of the bank's restructuring last year, meant Barclays was "well positioned to produce stronger earnings going forward".
Barclays said the settlement "resolves all actual and potential civil claims by the DoJ relating to Barclays' securitisation, underwriting and sale of mortgage-backed securities sold by Barclays between 2005 and 2007".
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Major Wall Street banks have already agreed penalties while HSBC, UBS and Royal Bank of Scotland are still waiting their turn.
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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