A unit of HSBC has reached a last minute settlement in a 14-year shareholder class action involving a company it acquired in 2003.
HSBC Finance was due to face off against shareholders in Chicago today, but confirmed this morning that it had agreed to pay $1.6bn to settle all claims.
In a statement, US-headquartered HSBC Finance said it could have faced $3.6bn in liabilities if the case had gone to trial.
The case started in 2002, when shareholders filed a case against Household International, arguing it had disguised bad loans to inflate their share price.
HSBC acquired the company the following year, transforming it into HSBC Finance.
A jury ruled in favour of shareholders at a 2009 trial, but in May 2015 the Court of Appeal ordered a retrial.
Former HSBC chairman Stephen Green had previously described the purchase of Household International as “an acquisition we wish we hadn’t done with the benefit of hindsight”.
HSBC Finance has confirmed it will face a pretax charge of $585m, including legal fees and expenses, in the second quarter.