BNP Paribas accused MBIA of committing a fraudulent restructuring in moving $5bn in cash and securities out of the bond insurer and into a new good insurer.
Both the firms agreed to settle in a deal whose terms are governed by a confidentiality agreement.
In December 2011, US-based financial services firm Morgan Stanley has reached a settlement with insurance company MBIA over disputes involving mortgage-backed investments.
Royal Bank of Scotland and Wells Fargo are the other banks who have settled the lawsuits.
The banks which are still challenging the February 2009 restructuring are Bank of America, Natixis, Societe Generale and UBS.
