Guy Hands has backed down in his lawsuit with Citigroup today.
Hands, who brought his case to the High Court in London earlier this week, had been suing the bank for £1.5bn worth of damages over his private equity firm Terra Firma's failed takeover of music group EMI.
Hands claimed that Citigroup had misled him throughout the bidding process for the music company, an allegation that the bank denied.
Terra Firma purchased EMI, which is well-known for representing artists such as The Beatles, for £2.4bn in 2007. However, the music company's performance faltered shortly afterwards, and Citigroup eventually stepped in and took control of EMI in 2011.
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"These claims were brought in good faith," said Hands in a statement. "However, it has become evident that our documentation of the fast-moving and complex events, and memories of these events after nine years, are no longer sufficient to meet the high demands of proof required for a fraud claim in court.
"The matter is now closed. Terra Firma is looking to the future."
A statement for Citigroup read: "We are very pleased that Terra Firma has unreservedly withdrawn the allegations, agreed to the dismissal of the proceedings and will pay Citi's costs in relation to this matter."
Hands has previously tried to sue Citigroup over the same issue in the US. Although the jury found in favour of the bank, the verdict was later overturned on a technicality.