NEW YORK – MBIA Inc agreed to pay Societe Generale $350 million to settle litigation over the bond insurer's restructuring, a person familiar with the case told Reuters on Wednesday.
Societe General was the last remaining bank out of 18 financial institutions which originally challenged MBIA's 2009 split. The banks claimed the move harmed them as policyholders.
An MBIA spokesman declined comment, and a spokesman for Societe Generale did not immediately return a call for comment.
Bank of America Corp on Monday agreed to pay $1.6 billion in cash to MBIA Inc and receive the right to buy a 4.9 percent stake in the bond insurer to resolve long-running litigation between the two companies.
The settlement marked Bank of America Chief Executive Brian Moynihan's latest step to settle wide-ranging lawsuits related to the financial crisis.
Bank of America and Societe Generale were the last remaining plaintiffs among 18 financial institutions that sued MBIA and the New York State Insurance Department after it approved a split between the bond insurer's structured finance unit and its municipal bond business in 2009.
In March, MBIA won dismissal of one case by the two banks after a New York judge ruled that the state insurance superintendent at the time, was not "arbitrary and capricious" in authorizing the split.
The banks, which appealed the decision, said the restructuring left the MBIA Insurance unit undercapitalized and siphoned $5 billion from the unit to benefit another entity, National Public Finance Guarantee Corp, at their expense.
(Reporting by Karen Freifeld; Editing by Gary Hill and Leslie Gevirtz)