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Credit Suisse agrees to $5.3B RMBS settlement with US authorities

Credit Suisse Group AG has agreed to pay $5.3 billion to settle claims that it missold RMBS ahead of the global financial crisis.

The Zurich-based bank said Dec. 23 that it reached an agreement in principle with the U.S. Department of Justice related to legacy RMBS business conducted through 2007. It would pay a civil monetary penalty of $2.48 billion to the DOJ, and provide $2.8 billion in consumer relief over the course of five years after the settlement.

The deal is subject to the negotiation of final documentation and approval by the group's board of directors, Credit Suisse noted.

The bank said it expects to book a pretax charge of about $2 billion in addition to its existing reserves in the fourth quarter in relation to the settlement.

Earlier the same day, Deutsche Bank AG said it agreed in principle to its own $7.2 billion settlement with the DOJ over similar MBS misselling claims. This follows the DOJ's Dec. 22 announcement that it filed a lawsuit against Barclays Plc unit Barclays Bank Plc and several of its U.S. affiliates over alleged fraud in its own sale of RMBS in the run-up to the 2008 financial crisis.