The U.S. Department of Justice on Thursday sued Barclays Plc for fraud in the sale of mortgage securities in the run-up to the financial crisis.

The British bank deceived investors about the quality of loans underlying tens of billions of dollars of mortgage securities between 2005 and 2007, according to the lawsuit, which was filed in U.S. district court in Brooklyn, New York.

Loans had been made to borrowers with no ability to repay and were based on inflated home appraisals, the complaint said.

Barclays said in a statement that the claims in the lawsuit are "disconnected from the facts" and that it has an obligation to defend against "unreasonable allegations and demands."

In terms of demands, Barclays was apparently referring to negotiations with the Justice Department to settle the claims without a case being filed.

"Barclays will vigorously defend the complaint and seek its dismissal at the earliest opportunity," the statement said.

The bank's U.S.-traded shares ended regular trading on Thursday down 1.8 percent at $11.07.

Barclays is among a number of European banks that have been under investigation for misconduct in the sale of mortgage securities, which contributed to the 2008 financial crisis.

Deutsche Bank and Credit Suisse are in negotiations over similar claims, sources have told Reuters.

Major U.S. banks including JPMorgan Chase & Co and Bank of America have already paid tens of billions of dollars to settle with U.S. authorities over their pooling and sale of the securities.

According to the lawsuit against Barclays, more than half the underlying loans in $31 billion worth of mortgage loans pooled into 36 deals defaulted.