WASHINGTON (AFP) - Swiss bank Credit Suisse agreed Friday to pay US$885 million (S$1.12 billion) to settle claims that it misled mortgage giants Fannie Mae and Freddie Mac in the sale of mortgage-backed securities.

Credit Suisse will pay about US$651 million to Fannie and US$234 million to Freddie, the sibling institutions that the US government seized amid the 2008 financial crisis to prevent their collapse The Federal Housing Finance Agency, which oversees the two, said the settlement resolves all claims in its lawsuit against Credit Suisse, as well as all claims against the Swiss bank filed by Ally Financial Inc., the agency said.

The claims alleged that Credit Suisse misrepresented the quality of mortgage-backed securities it sold to Freddie and Fannie during 2005-2007.

Credit Suisse agreed to the settlement while still "vigorously" denying the allegations in both cases.