Credit Suisse pays $495 million to settle legacy case

Credit Suisse pays $495 million to settle legacy case
© Reuters. FILE PHOTO: The logo of Swiss bank Credit Suisse is seen at its headquarters in Zurich, Switzerland October 4, 2022. REUTERS/Arnd Wiegmann/File Photo

By John Revill

ZURICH (Reuters) -Credit Suisse has agreed to pay $495 million to settle a case brought against it in the United States, the latest pay-out related to past blunders that have battered the Swiss bank’s reputation.

Credit Suisse said it would make the pay-out to settle claims brought by the New Jersey Attorney General related to the bank’s residential mortgage-backed security (RMBS) business before 2008.

The attorney general’s office alleged that Credit Suisse had “misled investors and engaged in fraud or deceit in connection with the offer and sale of RMBS.”

The attorney general’s office had claimed more than $3 billion in damages in a case filed in 2013.

“Credit Suisse is pleased to have reached an agreement that allows the bank to resolve the only remaining RMBS matter involving claims by a regulator and the largest of its remaining exposures on its legacy RMBS docket,” the bank said in a statement.

“The settlement, for which Credit Suisse is fully provisioned, marks another important step in the bank’s efforts to pro-actively resolve litigation and legacy issues.”

Credit Suisse’s chairman Axel Lehmann last week pledged to reform the bank after a “horrible” 2021 in which it lost billions of dollars.

Switzerland’s second biggest bank is trying to recover from a series of scandals, including losing more than $5 billion from the collapse of investment firm Archegos last year, when it also had to suspend client funds linked to defunct financier Greensill Capital.

The bank, one of the largest in Europe and one of Switzerland’s global systemically important banks, has had to raise capital, halt share buybacks and cut its dividend, but its recovery efforts have been hampered by a string of legal scandals.

In June, the bank was convicted of failing to prevent money laundering by a Bulgarian cocaine trafficking gang.

A Bermuda court ruled in March that former Georgian Prime Minister Bidzina Ivanishvili and his family were due damages of more than half a billion dollars from Credit Suisse’s local life insurance arm.

Last October, Credit Suisse pleaded guilty to defrauding investors over an $850 million loan to Mozambique meant to pay for a tuna fishing fleet and is paying U.S. and British regulators $475 million to settle the case.

The U.S. Justice Department is also investigating whether Credit Suisse continued helping U.S. clients hide assets from authorities, eight years after the Swiss bank paid a $2.6-billion tax evasion settlement.

Credit Suisse, whose share price has more than halved in the last 12 months, is scheduled to release details of a much anticipated strategic review alongside third-quarter results on Oct. 27.

Source: Reuters