UBS pays US$445m in mortgage securities settlement

Switzerland’s UBS has agreed a US$445m payment in the US, to settle claims brought by the National Credit Union Administration (NCUA) that the bank was instrumental in the collapse of American corporate credit unions by selling them faulty mortgage-backed securities.

The regulator, which last year recovered US$79.3m from UBS in a related claim, said that bank had agreed to the settlement without either admitting or denying wrongdoing. It closes a lawsuit filed in 2012 and is the latest in a series of deals struck with banks accused of improper sales to five corporate credit unions that failed.

To date NCUA has cumulatively recovered almost US$5bn against number of major banks, in settlements that have provided “a measure of accountability for the firms that sold faulty securities to the corporate credit unions,” said NCUA acting board chairman J. Mark McWatters. The total includes a US$1.1bn settlement agreed by Royal Bank of Scotland (RBS) last September.

The settlement with UBS relates to losses at US Central Federal and Western Corporate Federal credit unions, institutions that provided loans and other services to customer-facing credit unions before being taken into conservatorship in 2009 and later closed.

The NCUA had accused UBS of misleading both credit unions over the risk of US$1.15bn of residential mortgage-backed securities acquired in 2006 and 2007.

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