A multi-million dollar settlement fee relating to a securities lending lawsuit took the shine off an otherwise decent second quarter for Northern Trust.

The Chicago-based bank included pre-tax settlement fee of $46.5m in its April-June results on Wednesday, which related to claims it negligently breached securities lending contracts.

The case, which dates back to 2009, involved two Michigan-based pension funds, Global Investor/ISF understands – the Board of Trustees of the City of Pontiac General Employees Retirement System and the City of Pontiac Police and Fire Retirement System.

Both claimed the bank steered them toward risky assets and failed to sell Lehman Brothers stock and residential mortgage-backed securities at a reasonable time before markets collapsed.

A spokesperson for the bank declined to give further details at this stage. 

Aside from the settlement, revenue for the bank stood at $1.3bn in the three months to the end of June, an 11% improvement on the first quarter with growth in investment and other servicing fees.

Net income was $260.7m, compared to $269.2m in last year’s April-June period.

Custody and fund administration fees increased in Q2, the bank added, primarily due to new business.

Investment management fees were higher thanks to new business and lower money market mutual fund fee waivers.

Securities lending fees also increased, primarily reflecting higher spreads in the current quarter.