Feb 11 (Reuters) - New York-based municipal bond insurer MBIA Inc’s unit MBIA Insurance Corp entered an agreement to settle a litigation it filed in 2009 against lender Credit Suisse and certain affiliated entities over property debt in the United States.
The settlement followed a post-trial decision by a court awarding MBIA about $604 million in damages, MBIA said in a statement on Thursday.
Pursuant to the settlement, Credit Suisse has paid MBIA Corp $600 million, it said. But following the settlement agreement, the court dismissed the action, it added.
MBIA sued Credit Suisse, the second-biggest bank in Switzerland, in 2009 over hundreds of millions of dollars it paid out to compensate investors after thousands of property mortgages failed in the United States.
In November, New York Supreme Court Justice Jennifer Schecter ruled that Credit Suisse breached its representations and warranties to MBIA, which indemnified investors in residential mortgage backed securities issued ahead of the 2008 financial crisis.
The judge found that more than half of the mortgages in the transaction at issue were non-conforming and that MBIA “did not assume the risk of loss that they posed.”
Credit Suisse had already set aside $300 million in connection to the long dispute with MBIA, but it said in December that it expected the figure to rise to $680 million.
“We are pleased to have resolved this legacy matter,” a Credit Suisse spokeswoman said in a separate emailed statement.
“The settlement amount of $600 million is substantially less than our earlier guidance of up to approximately $680 million and has been fully provisioned for in our 4Q 2020 results, due to be announced on 18th February.” (Reporting by Nandakumar D and Kanishka Singh in Bengaluru; Editing by Rashmi Aich)