'Russian doll' case settled by Barclays

BARCLAYS bank has resolved amicably a potentially embarrassing $151m (£80m) lawsuit brought against it by Germany's HSH Nordbank over esoteric investments known as 'collateralised debt obligations'.

Both banks refused to comment on the details but Barclays will have paid a multi-million pound sum to settle.

CDOs package together debts owed by different companies. They became popular because they offer high returns.

HSH sued Barclays last September to retrieve its $151m investment in a CDO known as Corvus Investments. It said that Corvus was a 'Russian doll' investing in other Barclays CDOs, which intensified rather than spread the risks.

The case - which threatened red faces for senior bankers at Barclays Capital - was due to open in the London courts on Monday. Bob Diamond, who as boss of Barcap earned £17m in 2003, indicated last week that he hoped to resolve it.

He may have been keen to avoid publicity - possibly including further scrutiny of eight Barcap bankers who spent £44,000 in a London restaurant run by celebrity chef Gordon Ramsay in 2001.