BARCLAYS yesterday became the ninth bank to settle in the Enron bankruptcy proceedings, paying $144 million (£76 million) in cash to settle accusations that it was instrumental in helping Enron executives to commit fraud.

While denying any wrongdoing or liability, the bank said that the settlement was “preferable to the time, expense and unpredictability of litigation”.

The payment is the third-biggest by a bank so far. JPMorgan paid $350 million and Canadian Imperial Bank of Commerce $250 million.

However, unlike some other banks, Barclays negotiated the right to continue to claim on $310 million of Enron debt it owns, which is currently valued in the distressed debt markets at around $110 million.

“The resolution reflects Barclays lesser role relative to others involved in the litigation surrounding Enron’s bankruptcy,” the bank said.

Royal Bank of Scotland paid a much smaller settlement figure, but is understood to have sacrificed a loan with a face value of $330 million as part of its deal with Enron.

The deal leaves Citigroup and Deutsche Bank still in litigation with the rump of Enron, which today exists only to liquidate assets and distribute the proceeds to creditors.

Once an energy giant with estimated revenues of $111 billion, Enron imploded in 2001 as it emerged that huge debts had been illegally concealed in vehicles off the balance sheet. Senior executives have been jailed, although former chairman Ken Lay died while awaiting sentencing.

The settlement still leaves Barclays facing Enron-related action on two fronts. A class action lawsuit fronted by Bill Lerach and involving Chewco, one of the off-balance-sheet vehicles, is appealing against a July court ruling in which the case against Barclays was thrown out.

Also, the US Securities and Exchange Commission, the main securities regulator, is continuing to investigate the role of Barclays and other banks in the collapse. Several banks, including Citigroup and Merrill Lynch, have already settled with the SEC.

The Barclays settlement comes two weeks after the US Bankruptcy Court threw out a claim by Barclays against Arthur Andersen, the accounting firm destroyed by its role as auditor to Enron. Barclays had been hoping that Andersen could be compelled to shoulder some of the cost.

Barclays said the settlement would have no impact on its 2006 profits because it had already made adequate provisions in earlier years.

The deal with Enron requires approval from the Bankruptcy Court in New York.

Rich Ricci, chief operating officer at Barclays Capital, said: “In addition to our earlier dismissal from the class action, this marks another satisfactory step in resolving the issues outstanding from the Enron bankruptcy.”

BANKS THAT HAVE SETTLED

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