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By Steve Slater
LONDON, April 7 (Reuters) - Barclays has reached asettlement with a UK care home operator weeks before the startof a court case that was seen as a test case for whethercustomers might sue banks over the manipulation of Liborinterest rates.
Barclays had been accused by the care home operator ofmis-selling products linked to benchmark interest rates andsenior Barclays employees and former executives, includingformer chief executive Bob Diamond, had been due to testify atthe trial.
The case was being closely watched by banks and theircustomers, after Barclays and several other lenders were finedfor manipulating Libor or its euro equivalent Euribor.
If Barclays had lost it was expected to open the door formore bank clients to claim they were mis-sold products linked toLibor.
Graiseley Properties, the parent of Guardian Care Homes, hadclaimed that interest rate hedging products it was sold byBarclays were invalid because the bank had manipulated Liborrates, to which some of the products' prices were linked.
It sued Barclays for 70 million pounds ($116 million).Barclays said Guardian owed it the same amount, and was tryingto get out of repaying it.
"The parties have negotiated and agreed to a commercialrestructuring of Graiseley's debt, which reflects the impact ofchanges in conditions in this sector over the last few years. Graiseley has withdrawn the litigation," a spokesman forBarclays said.
Guardian Care Homes and its law firm could not be reachedfor comment.
The terms of the settlement were not released.
The battle in London's High Court was due to go to trial onApril 29 and had been expected to last for about six weeks. Ithad been due to be the first case tied to the manipulation ofLibor to reach trial. Deutsche Bank is also involvedin a London court case tied to benchmark rates.
Barclays had already had to hand over thousands of emailsand other documents from its former bosses and staff.
Diamond, former investment bank bosses Rich Ricci and Jerrydel Missier, and former finance director Chris Lucas were among23 people who had been called as witnesses for the trial.
Diamond and del Missier left Barclays in 2012 shortly afterBarclays agreed to pay a $450 million settlement with U.S. andUK authorities due to alleged Libor manipulation.
Guardian Care Homes' lawyers had said a $4 billion fund runby Barclays profited from low 3-month sterling Libor rates sothe bank benefited from the downward manipulation of Libor,while at the same time selling customers an interest ratehedging product "on the basis that Barclays believed rates wouldgo up".
($1 = 0.6020 British Pounds) (Editing by Matt Scuffham and Mark Potter)
