Swiss Banking giant Credit Suisse paid $600 million to financial guarantee insurer MBIA to settle long-running litigation connected to the US subprime mortgage crisis.
The plaintiff, MBIA Insurance Corp., said late Thursday that it had reached an agreement, after a post-trial court decision that ordered the Swiss bank to pay about $604 million in damages.
About Case
Last month, the New York state judge presiding over the case ruled against Credit Suisse in the 2009 suit brought by the bond insurer over alleged misrepresentations of the quality of loans underlying residential mortgage-backed securities it guaranteed in 2007.
MBIA had been seeking $686.7 million plus interest while Credit Suisse had estimated damages of $597.7 million.
The case is MBIA Insurance Corp. V. Credit Suisse Securities LLC, 603751/2009, New York State Supreme Court, New York County.
Q4 result prediction
Credit Suisse is expecting to post a fourth-quarter loss when it reports earnings on Feb. 18, after setting aside $850 million for U.S. legal cases including MBIA and booking a $450 million impairment on a hedge fund investment.
Comment from Company
“We are pleased to have resolved this legacy matter, which dates back to 2007.
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 fourth quarter 2020 results.”
Impact on Stock Market
MBIA’s shares rallied after the news, up almost 10% in pre-market trading.
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