Credit Suisse agrees to $5.3 billion mortgage settlement with US

Credit Suisse has agreed in principle to pay US authorities $2.48 billion (CHF2.54 billion) to settle claims it misled investors in residential mortgage-backed securities it sold in the run-up to the 2008 financial crisis, the Swiss bank announced on Friday.

Credit Suisse said it would also provide $2.8 billion in consumer relief over five years from the settlement, it said in a statement, adding the deal was subject to negotiation of final documentation and approval by its board of directors.

“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,” it added.

It was also reported on Friday that Deutsche Bank had agreed to a $7.2 billion settlement with the US Department of Justice (DOJ) over its sale and pooling of toxic mortgage securities in the run-up to the 2008 financial crisis.

The DOJ on Thursday also sued Barclays Plc on charges of fraud in the sale of mortgage-backed securities in the run-up to the 2008-09 financial crisis.

The Justice Department is still pursuing mortgage allegations against other lenders in addition to Barclays. Royal Bank of Scotland Group PLC, Wells Fargo & Co, UBS Group AG and HSBC are also under investigation, according to company disclosures.

American banks have paid tens of billions of dollars over the past three years to settle with US authorities over misleading investors about the quality of mortgages underlying securities.

In 2013, JPMorgan Chase & Co agreed to pay $13 billion. The following year, Bank of America Corp agreed to pay $16.65 billion, while Citigroup cut a deal for $7 billion. In February this year, Morgan Stanley agreed to pay $2.6 billion, and in April, Goldman Sachs Group Inc negotiated a $5 billion deal.