UniCredit SpA and U.K.-based hedge fund Caius Capital LLP have fully settled their dispute over the Italian banking group's treatment of convertible and subordinated hybrid equity-linked securities, or Cashes.

In May, Caius accused UniCredit of misclassifying €2.98 billion of cashes issued in 2008 as Tier 1 capital and have asked the European Banking Authority to open a formal investigation into the matter, which the regulator rejected. UniCredit in turn sued the hedge fund, seeking about €90 million in compensation.

As part of the settlement, Caius agreed to take no further public, legal or regulatory action in relation to the lender and its securities, and has confirmed — without any admission of guilt — that it made a lump sum payment to UniCredit. The bank also confirmed that it withdrew its complaint against Caius and the funds it manages.

"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 Dec. 18 joint statement.