Barclays has been pushed into a first quarter loss after paying $2bn (£1.4bn) to settle a lawsuit in the US over the sale of mortgage-backed securities.
The bank also put aside an additional £400m to cover an increase in payment protection insurance (PPI) mis-selling claims.
Barclays reported a pre-tax loss of £236m, compared with a profit of £1.68bn for the same time last year.
But excluding litigation costs, pre-tax profit rose by 1% to £1.7bn.
"This quarter we... reached an agreement with the US Department of Justice to resolve issues related to the sale of Residential Mortgage-Backed Securities between 2005 and 2007," said chief executive Jes Staley.
"While the penalty was substantial, this settlement represents a major milestone for Barclays, putting behind us a significant decade-old legacy matter."
Earlier this month, Barclays became the first UK bank to "ring-fence" its retail bank from its investment banking division, as part of new UK regulations meant to protect consumer cash from investment banking risks.
The results for the first three months of the year showed that pre-tax profits at the international division, which includes the investment bank, rose by 4% to £1.4bn, excluding litigation costs.
Richard Hunter, head of markets at Interactive Investor, said: "The indelible stain left on these numbers by litigation and conduct issues masks the reasonable progress which Barclays is making.
"Operationally the investment bank had a strong start to the year, with pre-tax profit sharply higher and impairment charges significantly lower."
Last week, it was revealed that Mr Staley is facing a fine by UK regulators for breaching rules when he tried to identify a whistleblower at the bank.
The Financial Conduct Authority (FCA) and the Prudential Regulatory Authority (PRA) began their probe into Mr Staley's conduct a year ago.
Barclays said last week that it continued to "have unanimous confidence in Staley and continues to recommend his re-election as a director at the Barclays annual general meeting on May 1".
Mr Staley, who has previously apologised for his conduct, said: "The FCA and PRA obviously completed a very thorough investigation and... we accept where they came out, and now it's time to focus on managing the bank going forward, and that's what we're going to do."