Credit Suisse arrives at $5.3bn settlement with US

19th Jan 2017 15:30

(ShareCast News) - Credit Suisse has come to a $5.3bn agreement with the US Department of Justice to settle the investigation into the bank's involvement in selling toxic mortgage debt before the last financial crisis.The investment bank will pay a $2.5bn civil penalty and $2.8bn in consumer relief, to be paid over five years after the settlement, according to the DoJ.CS conceded that it sold investments containing loans that it knew were likely to fail as part of the settlement. The civil settlement doesn't preclude the government from seeking criminal charges against the company or individual executives."Credit Suisse made false and irresponsible representations about residential mortgage-backed securities, which resulted in the loss of billions of dollars of wealth, and took a painful toll on the lives of ordinary Americans," Attorney General Loretta E. Lynch said in a written statement.The bank said it plans to take a pretax charge of around $2bn on top of existing reserves to account for the settlement.Chief executive officer Tidjane Thiam has already raised CHF6bn in late 2015 and is planning a partial public offering of the Swiss unit later this year to obtain more capital."Credit Suisse is pleased to have reached an amicable settlement that allows the bank to put this legacy matter behind it, while also protecting the interests of its clients, employees and other stakeholders," the company said. "We remain relentlessly focused on serving our clients and continuing our progress toward our strategic goals of being a resilient, profitable and compliant organization."In total, the bank has been charged with over $11bn worth of fines and legal settlements since the start of 2018, ,more than any other European bank except Deutsche Bank, according to Bloomberg's calculations.Thiam plans to cut jobs in New York and London as part of his plans to turn the bank around.Fellow European lenders involved in pending investigations on toxic debt include HSBC, UBS and Royal Bank of Scotland.