Barclays settles Libor-linked test case with care home operator

Barclays has settled a forthcoming landmark court case with a UK care home operator out of court just weeks before it was due to start.

The case, which was seen as a test as to whether customers might sue banks over the manipulation of Libor interest rates, had seen Barclays accused of mis-selling products linked to benchmark interest rates.

Senior Barclays employees and former executives, including former chief executive Bob Diamond, had been due to testify at the trial.

The case was being closely watched by banks and their customers, after Barclays and several other lenders were fined for manipulating Libor or its euro equivalent Euribor.

If Barclays had lost it was expected to open the door for more bank clients to claim they were mis-sold products linked to Libor.

Graiseley Properties, the parent of Guardian Care Homes, had claimed that interest rates hedging products it was sold by Barclays were invalid because the bank had manipulated Libor rates, to which some of the products' prices were linked.

It sued Barclays for 70 million pounds. Barclays said Guardian owed it the same amount, and was trying to get out of repaying it.

"The parties have negotiated and agreed to a commercial restructuring of Graiseley's debt, which reflects the impact of changes in conditions in this sector over the last few years. Graiseley has withdrawn the litigation," a spokesman for Barclays said.

Guardian Care Homes and its law firm could not be reached for comment.