Credit Suisse reaches RMBS settlement from 2007 housing boom
Credit Suisse announced to investors it reached a settlement in principle with the U.S. Department of Justice related to its legacy Residential Mortgage-Backed Securities business during the housing boom.
The news is similar to the settlement also recently reached by Deutsche Bank and Justice.
This settlement releases Credit Suisse from potential civil claims by the DOJ related to its securitization, underwriting and issuance of RMBS, according to a release on its investor relations website.
The news will cost the bank around $5 billion.
More specifically, under the terms of the settlement, Credit Suisse would pay the DOJ a civil monetary penalty of $2.48 billion.
In addition, Credit Suisse would provide consumer relief totaling $2.8 billion over the course of five years post-settlement.
Credit Suisse will take a pre-tax charge of approximately $2 billion in addition to its existing reserves against these matters.
“This will be taken in our 4Q 2016 financial results,” the bank said.