Credit Suisse to pay $495 million to settle legacy RMBS case
Company says it is "fully provisioned" for the payment.
Credit Suisse Group AG agreed to pay $495 million to settle the largest remaining case related to its role in selling residential mortgage-backed securities in the US that contributed to the 2008 financial crisis.
The Swiss bank said in a statement on Monday that it’s “fully provisioned” for the payment, which will resolve claims tied to more than $10 billion in such securities. The New Jersey Attorney General had alleged damages of $3 billion in a litigation 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,” it said.
Investors are closely watching the bank ahead of an Oct. 27 strategy announcement aimed at putting an end to years of scandals and losses that have eroded investor confidence. The Zurich-based bank has suffered weeks of tumult as markets questioned its stability amid a broader sell-off.
Credit Suisse shares climbed 1.1% to 4.47 Swiss francs ($4.46) by 9:10 a.m. in Zurich, though the stock has still lost more than a fifth of its value this year.
Legal risks
?Credit Suisse is among lenders that have been defending themselves against claims over the sale of mortgage securities that plummeted in value during the 2008 crisis. It paid $600 million last year to settle a lawsuit with MBIA Insurance Corp over mortgage securities.
The banks have faced allegations that they misrepresented the quality of the home loans underpinning these securities in order to win buyers, exacerbating the impact of the sub-prime mortgage crisis.
Credit Suisse faces a longer list of legal woes. Last week, the prospect of fresh legal risks for the bank arose when US authorities launched a probe investigating whether the bank helped clients hide assets. In Singapore, a Credit Suisse trust is awaiting the outcome of a trial that will determine its liability for losses tied to a rogue banker. In June, Switzerland’s top court handed the bank a guilty verdict in an historic case over money laundering.
Related Posts
Bank of America to pay $12 million over reporting of false mortgage data - Read The Story from December 2, 2023 »
CFPB bans RMK Financial from mortgage industry for deceptive practices - Read The Story from February 28, 2023 »
Mortgage fraud trial looms for top prosecutor - Read The Story from January 18, 2023 »