Liquidators of British merchant bank Barings settled out of court yesterday with the bank's former auditors, avoiding a lengthy and costly lawsuit aimed at recouping £1 billion sterling (€1.7 billion).

Mr Charles Aldous, lawyer for liquidator Ernst & Young, told the High Court that a provisional agreement had been reached with auditor Coopers & Lybrand. The confidential settlement needs court approval, which is expected by the end of July. Ernst & Young issued a brief statement confirming the deal, but another action involving fellow auditor Deloitte & Touche is continuing. These claims are due in court in October.