Swiss banks say cooperating with US probe

14th May 2010, Comments 0 comments

Swiss banking giants UBS and Credit Suisse said Friday they would cooperate with US investigations into whether they had misled ratings agencies to inflate the grades of certain mortgage-backed products.

"We have received a subpoena. That matter is in an early stage. UBS intends to cooperate fully with the authorities," a spokesman for UBS said.

A Credit Suisse spokeswoman also said that "it is our practice to cooperate fully with regulatory authorities," although she would not be drawn into confirming or denying that the bank had received a subpoena on the case.

The New York Times reported earlier that New York's top prosecutor, Andrew Cuomo, was probing whether eight banks misled ratings agencies to inflate the grades of certain mortgage securities they were selling.

Standard & Poor's, Fitch Ratings and Moody's Investors Service were said to have rated the mortgage deals. The agencies have taken flack for overstating the quality of mortgage securities that later plunged in value in the wake of the housing collapse.

The New York Times, citing unidentified individuals with knowledge of the investigation, said Cuomo was also looking into a practice of bank mortgage desks hiring rating agencies employees to help create mortgage deals that secured better ratings than they were due.

Besides the two Swiss banks, Goldman Sachs, Morgan Stanley, Citigroup, Deutsche Bank, Credit Agricole and Merrill Lynch -- which is owned by Bank of America -- were all cited as targets of investigation by the newspaper.

On Thursday, Bank of America, Citigroup and Deutsche Bank and Credit Agricole all said they were cooperating with investigators.

© 2010 AFP

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