Business

HSBC to pay $1.6bn to settle lawsuit

An HSBC logo Image copyright Reuters

A division of HSBC has agreed to pay $1.575bn (£1.1bn) to settle a 14-year lawsuit.

It stems from a lawsuit the British bank inherited when it bought the US lender Household International in 2003.

Shareholders accused Household International, now known as HSBC Finance, of inflating its share price and engaging in misleading lending practices.

It expects the settlement to result in a charge of about $585m (£409m).

HSBC had previously estimated its potential exposure at about $3.6bn.

The settlement is still subject to court approval.

The British bank bought Household International, which provides loans to low-income homeowners, for about $14.2bn in 2003.

However, following the subprime mortgage crisis, the bank was forced to write down tens of billions of dollars of bad loans.

In March 2009, HSBC chairman Stephen Green said: "With the benefit of hindsight, this is an acquisition we wish we had not undertaken."

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