Credit Suisse Keeps Millions Aside to Cope Up With Legal Expenditure

Credit Suisse Keeps Millions Aside to Cope Up With Legal ExpenditureThe legal costs keep piling up for Credit Suisse.

On Thursday, the Swiss bank revised its results again to reflect an additional charge of 468 million Swiss francs, or about $528 million, in increased legal provisions primarily related to a continuing investigation into Americans who secretly held assets in Swiss accounts.

As a result, Credit Suisse reported a fourth-quarter loss of 476 million francs.

In February, the bank initially reported a profit of 267 million francs for the last three months of 2013. Its quarterly results initially reflected 514 million francs in legal provisions related to mortgage litigation and the tax inquiry.

In recent weeks, however, the bank has revised its results downward to reflect an $885 million settlement to resolve claims that it had sold questionable loans to the mortgage finance giants Fannie Mae and Freddie Mac in the run-up to the financial crisis, and has now made additional provisions related to the tax investigation.

The latest provision comes on the heels of a two-year investigation by the United States, which found that Credit Suisse had actively helped American citizens hide billions of dollars from the tax authorities.

Credit Suisse executives, including Brady W. Dougan, the chief executive, were questioned on the findings at a Senate committee hearing in Washington in February.

The United States Department of Justice is investigating more than a dozen Swiss financial institutions and has prosecuted dozens of Americans who failed to pay taxes on income-generating accounts they held in Switzerland and had not disclosed to the American government. A Credit Suisse spokesman declined to comment Thursday on whether a settlement with Washington was close.

The banks have been reluctant to share client information for fear of breaching bank secrecy laws in Switzerland.

In 2009, the Swiss bank UBS paid a $780 million fine and entered a deferred-prosecution agreement with the United States government. As part of the agreement, it turned over the names of more than 4,000 Americans with UBS accounts.

Last year, Wegelin & Company, the oldest bank in Switzerland, pleaded guilty to a criminal conspiracy charge and was ordered to pay $74 million. Wegelin, which was founded in 1741, has sold off its assets and plans to close its doors once it resolves legal issues related to the American investigation.

For 2013, Credit Suisse reported net income of 2.33 billion francs, compared with 1.35 billion francs a year earlier.

Mr. Dougan remained the highest-paid executive at Credit Suisse in 2013, with a 26 percent increase in total compensation, to 9.79 million francs. He received total compensation of 7.77 million francs in 2012.

 

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