UBS agrees to settle US housing claims UBS is set to pay more than SFr700m ($746m) to settle US claims relating to the alleged mis-selling of mortgage-backed securities in the run-up to the financial crisis. The Swiss lender is one of 18 banks against which the Federal Housing Finance Agency has filed cases, as it seeks to recoup money owed to government-controlled housing giants Fannie Mae and Freddie Mac following their near-collapse in 2008. The FHFA alleged that UBS had misrepresented the quality of loans underlying around $6.4bn of residential-mortgage-backed securities in which Fannie Mae and Freddie Mac had invested between September 2005 and August 2007, according to court documents released in April. In previous regulatory disclosures by UBS, the FHFA had brought claims "for damages and rescission under federal and state securities laws and state common law and allege[d] losses of at least $1.2bn plus interest." On Monday, UBS said it had reached an agreement "in principle" to settle the FHFA's claims. The bank did not disclose the precise amount of the settlement, which is still subject to "documentation and final approvals" by both parties. However, UBS said it would take litigation provisions of SFr865m in the second quarter, around SFr700m of which relates to RMBS and other claims and would be booked in its non-core legacy portfolio. UBS said this provision and "litigation provisions established by UBS . . . in prior periods" would cover the settlement and "encompass pending RMBS-related litigation brought by the FHFA against UBS on behalf of Fannie Mae and Freddie Mac as well as certain unasserted claims." The Swiss group said a further SFr100m of the provisions related to the tax deal finalised last year between Switzerland and the UK. Under the terms of the deal, Switzerland's banks had to make an upfront payment to British authorities that would be returned after the exchequer had received a certain amount in tax payments. However, the Swiss Bankers Association revealed this month that the deal would yield far smaller tax revenues than previously expected, raising the prospect that banks will not get their downpayments back. Credit Suisse and Julius Baer have set aside SFr90m and SFr28m respectively against this possibility. Despite the latest round of provisioning, UBS still reported better second-quarter profits than it managed a year earlier. In the three months to the end of June, the bank's net income was around SFr690m, up from SFr425m in 2012. UBS also reported healthy inflows in its wealth-management businesses, with the Americas division bringing in around SFr2.7bn in net new money, and the non-Americas division collecting SFr10.1bn, more than offsetting net outflows of SFr2bn at the group's asset management arm. The bank will release full details on July 30. UBS shares rose 3.3 per cent to €18.19 on Monday.