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Regulatory Sanctions

Credit Suisse Reportedly Near U.S. Mortgage Settlement

December 20, 2016

Credit Suisse and the U.S. Department of Justice may reach an agreement as soon as this week to settle the federal investigation into the bank’s handling of mortgage-linked securities before the 2008 financial crisis. CS is confident it can reach a resolution for less than the $5-$7 billion that the DOJ has demanded. Just last week, CEO Tidjane Thiam met with U.S. Attorney General Loretta Lynch last week.

 

A large settlement could complicate Thiam’s overhaul of the Zurich-based firm. He has already pulled back from investment banking, cut thousands of jobs this year in New York and London, all in an effort to free up capital and focus on wealth management. The bank has reportedly set aside almost $2.1 billion in general litigation provisions, mainly for mortgage-related matters.

 

In any case, things could be worse. The DOJ has demanded $14 billion from Deutsche Bank, which is also reported to be nearing a settlement.