Credit Suisse reaches deal with US over mortgage-backed securities
Credit Suisse said yesterday it would pay $495 million as part of a deal reached with U.S. prosecutors in a long-running dispute over mortgage-backed securities, settling one of the last legal cases dating back to the 2008 financial crisis.
The European lender said in a statement it had agreed with New Jersey authorities to make the "one-time payment... to fully resolve claims" for compensation, and said it had already provisioned the amount.
In the claim filed in 2013, Credit Suisse was criticised for not having provided sufficient information on the risks relating to $10 billion of mortgage-backed securities.
Switzerland's second-biggest bank said yesterday that the agreement "marks another important step in the bank's efforts to pro-actively resolve litigation and legacy issues."
Subprime mortgages, credit granted to borrowers often with poor credit histories or insufficient income, were packaged into financial products and sold to investors.
But as borrowers defaulted on many of those mortgages, investors had no way to tell what portion of the loans in the derivatives were bad. Those products were at the heart of the 2008 financial crisis, which sparked a global recession and brought the international financial system to the brink of collapse.
Last year, Credit Suisse paid $600 million to financial guarantee insurer MIBA to settle other long-running litigation connected to the U.S. subprime mortgage crisis
Credit Suisse said last January it was increasing the provisions set aside for the MBIA case and others involving mortgage backed securities by $850 million.
- Log in to post comments