UniCredit Wins Payment After Fund Alleged Bank Misstated Capital

(Bloomberg) -- UniCredit SpA settled a dispute with a London hedge fund that had accused the Italian bank of boosting capital strength by misclassifying certain securities.

UniCredit’s so-called CASHES notes were issued in 2008. Caius Capital in May said the bank wrongly classified the hybrid notes as core capital. UniCredit in turn sued Caius for about 90 million euros ($102 million).

“Caius acknowledges UniCredit’s position that it has at all times acted properly in relation to the classification of its capital securities based on the approvals and guidance provided to UniCredit by its competent authorities,” according to a joint press release from the bank and the hedge fund Monday.

Financial terms of the “lump sum” settlement won by UniCredit weren’t disclosed and Caius made no admission of liability or wrongdoing, according to the statement. Caius also agreed to take no further action against UniCredit, and to “refrain generally from further discussion or public statements” in relation to the bank.

In July, European regulators shot down Caius’s request to open an inquiry into how the 2.4 billion euros of CASHES notes should be treated. Caius had a short position in the notes, people familiar with the matter said at the time. UniCredit said in May that its use of the notes had been fully disclosed to the market and reviewed by regulators.

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