Moody’s today affirmed the ratings of Credit Suisse AG (A1 senior debt, A1 deposits, baa2 Baseline Credit Assessment) following Credit Suisse’s announcement of a settlement in principle with the U.S. Department of Justice (DOJ) regarding civil claims in connection with the bank’s issuance and underwriting of residential mortgage-backed securities (RMBS) conducted through 2007. Under the agreement, Credit Suisse has agreed to pay a civil monetary penalty of USD2.48 billion and to provide USD2.8 billion in consumer relief to be delivered over the course of five years post settlement. The outlook on Credit Suisse’s debt and deposit ratings is stable.
Deutsche Bank and Credit Suisse have agreed to pay billion in fines relating to the collapse of the US housing market that contributed to the financial crisis, striking deals before the Trump administration takes power.
The government has accused the banks of misleading investors about the quality of their loans. The inquiries related to deals done between 2005 and 2007.
Deutsche Bank agreed to a $7.2 billion settlement with the DoJ over its sale and pooling of toxic mortgage securities.
Credit Suisse intends to cut about 900 job places in Switzerland to lift profitability as it gears up for a partial sale of the Swiss division, as Bloomberg referred today, according to two people with knowledge of the matter.
Credit Suisse’s ultimate goal is to eliminate 1,600 jobs in Switzerland by the end of 2018, the sources said.
A spokesman for Credit Suisse in Zurich declined to comment.
The US Department of Justice is asking Credit Suisse to pay between $5 billion and $7 billion to settle an investigation into its selling of mortgage-backed securities, a source with knowledge of the matter told Reuters on Tuesday.
The claim against Credit Suisse, which is likely to be negotiated in 2017, far outstrips the bank’s and investors’ expectations. However, if the sides do not reach an agreement, US authorities could sue the bank. Credit Suisse and the Department of Justice declined to comment.
An Italian judge approved on Wednesday a settlement agreement between Credit Suisse AG and the country’s authorities under which the Swiss bank will pay 109.5 million euros to end a tax probe, Reuters reported.
Milan prosecutors have been investigating since 2014 an alleged fraudulent system used by the bank to transfer up to 14 billion euros to offshore accounts, mainly through the use of insurance policies. Some 13,000 clients are allegedly involved and remain under investigation.
Credit Suisse announced on Wedsneday more than CHF1 billion ($991 million) in extra cost cuts, as Chief Executive Tidjane Thiam looks to compensate for challenging conditions which have hampered his restructuring of the lender as Reuters report.
In a statement ahead of its investor day, the bank lowered its operating cost base target for 2018 to below 17 billion francs from below 18 billion francs. It also increased planned net cost savings target to greater than 4.2 billion francs by end-2018 from 3.2 billion.
The Financial Industry Regulatory Authority (FINRA) said on Monday it has fined Credit Suisse’s U.S.-based securities business $16.5 million for ineffective anti-money laundering programs.
According to FINRA’s action, Credit Suisse’s suspicious activity monitoring program was deficient on two fronts.
Credit Suisse primarily relied on its registered reps to identify and escalate potentially suspicious trading, including in microcap stock transactions, but “high-risk activity was not always escalated and investigated as required,” FINRA states.
Credit Suisse is preparing a new cost-savings program that puts as many as 1,300 jobs in Switzerland on the line, according to Schweiz am Sonntag.
The plan will be announced Wednesday, when the lender holds its investor day in London, the newspaper said, without saying where it got the information. Credit Suisse’s Swiss unit may slash an additional 1,000 to 1,300 positions, or about eight to 10 percent of the unit’s workforce, it said. Last week, Bloomberg reported that the group is cutting about 175 jobs in London to lower costs, part of its overhaul that sees the lender focusing more on wealth management.
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