Deutsche Bank and Credit Suisse have agreed to pay $632m in cash and to provide $1.1bn of financing to Huntsman to settle the US chemicals group’s lawsuit against the banks for scuppering its private equity-backed takeover last year.

The move brings the curtain down on Huntsman’s battle to win compensation for the collapse of its takeover by Hexion, its Apollo Management-owned rival, after the two banks refused to finance the $6.5bn deal signed in July 2007.