HSBC Holdings PLC’s (NYSE:HSBC) restructuring effort could be affected by increased litigation charges, in addition to new proposed regulation by the Basel Committee, for estimating operational risk. HSBC’s unit HSBC Finance Corp has agreed to settle the shareholder claims related to Household International, which are 14-years old, for the payment of worth $1.575 billion.

HSC spokesman Rob Sherman said: “we are please to resolve this 14-year case that’s based on events that took place before HSBC acquired Household,” as per Reuters. Household International provides consumer loans and credit cards. HSBC acquired the company in 2005. In 2002, the company’s shareholders sued the company for overpricing shares through misrepresentation of its loan quality and lending practices. Since the acquisition, HSBC is defending against shareholders in the lawsuit.

During full fiscal year 2015 (FY15), HSBC’s posted settlements and provisions in connection with legal matters surged 39%, compared to FY14. British banks are largely burdened with high legal costs, which are expected to limit the banks’ profitability. Moody’s highlighted in its report in March, that litigation and misconduct charges surged 40% in FY15, as per the Financial Times. Laurie Mayers, Moody’s associate managing director, said that “this significant increase [in charges] in 2015, despite some decline in 2013 and 2014, demonstrates that these charges continue to present considerable tail risk.”

According to a press release at Robbins Geller Rudman and Dowd LLP, HSBC and shareholders reached the settlement agreement just hours before the second trial was about begin. Mike Dowd, the lead trial attorney at the company emphasized that “…after 14-years of hard-fought litigation-including a trial and an appeal- we obtained a record recovery…” The settlement is subject to approval. James Glickenhaus, a Glickenhaus & Co. investment professional, and one of the lead plaintiffs said: “I am very happy with the great job that our lawyers…did over many, many years to achieve this incredible result.”

Increased litigation costs could pose risk to HSBC profitability. In March, the Basel Committee proposed a standard model for calculating operational risk. Banks use internal and customized models to estimate operational risk while the new regulation will require the global banking segment to use uniform model. Operational risk increases following the increase in litigation charges. An operational risk constitutes breakdowns in the internal processes and systems. Therefore, increase in litigation charges could deteriorate the bank’s operational risk. With a standardized model of calculation, the bank would be required to generate more capital to manage the operational risk.

On the other hand, HSBC restructuring efforts could be affected by new regulations. Last year, HSBC announced it would reshuffle its global business operations; exiting non-profitable businesses, venturing into profitable ones and jobs cut. Furthermore, in order to improve the internal compliance matters at the bank, HSBC boosted its compliance team in May, with 175 financial crime compliance employees. Internal compliance came under the spotlight significantly post Panama Papers leak.

Note that the latest settlement agreement comes amid the jitter-inflicted markets driven by fears over Brexit. The UK referendum is due on June 23, for Britons to decide whether to stay or exit the European Union (EU). Fears over uncertain macroeconomic conditions following Brexit has cautioned banks to outline their contingency plans. Most likely, the bank has resolved the charges in order lower the impact of lawsuits on restructuring, while Brexit fears keep banks on the edge.