Credit Suisse agrees $495m payout
By Abigail Townsend
Date: Monday 17 Oct 2022
(Sharecast News) - Credit Suisse has agreed to pay nearly $500m over claims it misled investors about mortgage-linked investments in the US.
The Swiss lender said on Monday that it had agreed to make a one-time payment of $495m after it reached the final settlement with the New Jersey attorney general.
The claims relate to its residential mortgage-backed securities (RMBS) business in the run-up to the 2008 financial crisis. The attorney general, which had claimed damages of more than $3bn, alleged in 2013 that Credit Suisse had "misled investors and engaged in fraud or deceit in connection with the offer and sale of RMBS".
Credit Suisse said it was "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 added: "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."
According to Reuters, the bank still has five remaining RMBS cases at various stages of litigation, but all are expected to be resolved in the next six months.
The collapse of poorly-constructed RMBS was one of the core factors behind the 2008 financial crisis. Credit Suisse has already paid out considerable sums relating to the products, but has been hit by fresh scandals since then, most notably the collapse of Greensill Capital and Archegos Capital.
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