RBS pulls out of MBIA legal action

ROYAL Bank of Scotland has withdrawn from two lawsuits filed by a number of banks challenging the 2009 restructuring of MBIA, once the world’s largest bond insurer.

The withdrawal, which was disclosed in a stipulation filed on Friday in New York State Supreme Court in Manhattan, still leaves a number of plaintiffs, including Bank of America, BNP Paribas, HSBC, Merrill Lynch, Morgan Stanley, Natixis, Societe Generale and UBS.

The filing did not include a reason for Royal Bank’s withdrawal.

RBS joined others that have left the litigation, including the US bank Wells Fargo, which withdrew from the lawsuits earlier this month.

The banks are suing over the split of MBIA’s municipal bond business from its structured finance operations, which suffered big losses from insuring mortgage debt.

The lawsuits assert the reorganisation left the structured finance unit unable to pay off billions of dollars in claims.