Barclays, along with seven French banks, was named in a lawsuit filed in New York on behalf of Jews who were unable to reclaim money they deposited during the Nazi era.

Barclays is the only one of the eight to settle the claims.

Holocaust victims look set to benefit from the compensation

The bank, which estimates it had about 335 Jewish depositors at its French branches in 1941, has also agreed to make historic documents available relating to how its banks operated in France during the Nazi era.

Kenneth McCallion, the New York attorney who led the case, said the $3.6m would first be distributed to any depositors or their heirs who could be located.

Mr McCallion said: "We commend Barclays for their forthrightness.

"Instead of moving to dismiss the case, Barclays engaged in a serious and extensive effort designed to shed light on the activities of its bank."

Barclays was not available for immediate comment.

Holocaust charities to benefit

At least one woman living in New York City is a named plaintiff in the lawsuit and the bank will attempt to find others through adverts.

Any remaining money will benefit Holocaust-related charities and other Jews whose money was confiscated.

However the settlement must still be formally approved by a US judge.

Chase development

The announcement of the Barclays settlement came as the World Jewish Congress announced it had entered into discussions with Chase Manhattan Bank, which has acknowledged seizing about 100 accounts held by Jews in its Paris branch during World War II.

Mr McCallion said: "We are continuing our investigation of Chase activities in Paris and expect to announce the results shortly."

Recently unclassified reports from the US Treasury about the activities of Chase in Paris in the 1940s indicate that the local branch worked "in close collaboration with the German authorities" in freezing Jewish assets.

But Elan Steinberg of the World Jewish Congress stresssed: "Nobody at Chase today is guilty.

"They were not involved in whatever happened, but they do accept that they have an institutional responsibility."

A Chase spokesman said the bank had found its discussions with the WJC helpful and would be continuing them.

Chase spokesman Ken Herz said: "This is a moral issue that we take very seriously."

Last summer Swiss banks agreed to pay $1.25bn to compensate tens of thousands of Jews whose assets were seized during World War II.