The Royal Bank of Scotland has withdrawn from three suits against municipal bond insurer MBIA Inc.
The bank withdrew from the cases on Friday, said MBIA spokesman Kevin Brown.
“The terms of the settlement are confidential,” said Mike Geller, head of public relations for the Americas branch of the Royal Bank of Scotland. “We don’t have any comment.”
MBIA also declined to comment.
The withdrawal follows an MBIA investor conference call on Wednesday, where chief executive officer Joseph Brown suggested his company was near settlements with several companies.
Only nine of the original 21 plaintiffs remain active against MBIA in “transformation” litigation, according to court documents. This litigation challenges MBIA’s 2009 decision to place its municipal insurance business into a new unit.
The remaining plaintiffs are BNP Paribas, HSBC Bank USA NA., Merrill Lynch International, Bank of America NA, Morgan Stanley Capital Services Inc.; Natixis; Natixis Financial Products LLC; Société Générale; and UBS AG, London Branch.
MBIA’s problems stem from the busted real estate bubble, during which many banks made dubious loans and securitized them. MBIA and other companies insured these securities. When the recession hit in 2008, real estate values plunged, unemployment spiked, and many home owners stopped making payments on their mortgages. The securities turned out to be worth far less than had been promised.
The plaintiffs have three cases going forward. One is expected to reach the trial phase in February or March, MBIA has said. The other case may reach trial by the end of 2012. The third case only started recently and may be determined by the outcome of the other cases.
In a different but related action, MBIA says the banks misrepresented the loans that MBIA insured and is suing the banks.
The Royal Bank of Scotland is a wholly owned subsidiary of the Royal Bank of Scotland Group plc. It was founded in 1727 and is based in Edinburgh, Scotland.
