Four years after it became the first bank to settle with the US authorities for rigging the London interbank offered rate, a decision that rebounded against it, Barclays has taken a different line over allegations of mis-selling mortgage-backed securities.

While other banks have agreed settlements with the US Department of Justice in respect of these instruments sold before the 2008 crisis, negotiations between Barclays and the authorities have broken down. It will be the last leading bank to settle and it is a big call. Assuming that the case concludes after the third week of January, it will do so under a new administration at the DoJ, and it is hard to read the signals from the new regime. Will it want to draw a line under the sins of the past or set an example which shows the public it understands the continuing outrage over the banks’ past behaviour? If the latter, Barclays management will regret not taking the opportunity to save shareholders’ funds and bury bad news during the holiday period. In making such a call, however, senior management is sending a positive message to investors: namely that it is back in control of its business. It spent three years after Libor trying to rebuild relations with the authorities; now it believes it can stand firm. It does so with the faith that its defence has merits. It was late into the mortgage-backed securities business — and, although this is nothing to be proud of in a shamefully egregious business, it believes its sales practices were more conservative than those of many other banks.

Nor is there any financial need to rush. While other banks have been keen to secure a discount from an early settlement, Barclays’ capital position has been partly restored. It cannot waste shareholders’ funds but it is no longer forced to grab at deals that might save it a couple of billion. Reports say the authorities seek a settlement of $5bn; Barclays has offered $2bn. Barclays looks like a bank that knows what it wants to be. A well-received strategy focusing on a transatlantic axis, investor appetite for shares in Barclays Africa and better market conditions for the slimmed-down investment bank have increased management confidence. The timing of Jes Staley, in office as chief executive for a year now, looks impeccable. However, as he and chairman John McFarlane sit down to enjoy their Christmas dinner — presumably not together — they could do worse than read the US prosecutors’ case against Barclays. Accusations of fraudulent sales of $31bn of mortgage-backed securities in 36 separate deals, false representations of due diligence and defective loans are a chilling reminder of what an investment bank can potentially get up to. In rejecting the plan by Antony Jenkins, former chief executive, for a radically reduced investment bank, they have signalled that they can control the beast. That, rather than the decision to fight the DoJ, is the really big bet they have made.