Credit Suisse said Monday it has reached a final agreement with the New Jersey Attorney General to settle the latest mortgage-backed securities litigation that dated back to the 2008 financial crisis. intense press and market rumors as it approaches a review of its strategy after repeated scandals, will pay an amount of 495 million dollars (507 million euros) to settle the claims for legal damages,” she said in a statement. This amount is covered by provisions, specifies the bank.
The inability of households to repay their loans when interest rates rose led to the so-called subprime financial crisis in 2008. The agreement with the US attorney “marks another milestone in the bank’s efforts to proactively resolve past disputes and issues“says Credit Suisse in the press release. The New Jersey litigation was the latest but also the most important in terms of legal compensation for these titles at the heart of the 2008 crisis.
In the lawsuit filed in 2013, the New Jersey state attorney general criticized the bank for failing to disclose enough risk information about $10 billion in mortgage-backed securities. The compensation claims in the lawsuit totaled $3 billion. Last year, Credit Suisse further increased its provisions, setting aside $850 million to cover these disputes. In the first exchanges, the action climbed 1.47% to 4,482 Swiss francs, exceeding the SMI, the flagship index of the Swiss Stock Exchange, up 1.05% as press rumors continue to swirl around the number two in the Swiss banking sector.
According to FinancialTimes, the bank would not only consider disposals in its investment bank but would also consider the sale of some of its domestic activities in Switzerland. Rumors are mounting ahead of an update scheduled for October 27 on its new chief executive’s plans to turn around the bank after a buildup of scandals since British financial firm Greensill went bankrupt in March 2021.