The Switzerland-based investment banking company Credit Suisse said on Monday that it will pay $495 million to settle a dispute concerning mortgage-backed securities.
The dispute dates back to the financial crisis in 2008 when mortgages and loans were given to individuals who had insufficient income or a history of defaulting on loans. The market ended up losing millions of dollars in bad debt as several people around the world defaulted on their loans.
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In 2013, a lawsuit was filed in New Jersey regarding Credit Suisse’s role in the crisis and the bank has now agreed to conclude the proceedings with a “one-time payment… to fully resolve claims”.
According to AFP, the bank was accused of not having a proper measure of the risks that it took on mortgage-based securities and the $495 million will be paid as compensation for the involvement.
Credit Suisse has released a statement stating that the settlement will allow them “to resolve the only remaining RMBS (residential mortgage-backed securities) matter involving claims by a regulator and the largest of its remaining exposures on its legacy RMBS docket”.
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The settlement, which was approved by the New Jersey Attorney General, was welcome news for investors as the share prices of the company rose at the Swiss Stock Exchange.
Credit Suisse joined a long list of financial institutions around the world that faced fines for their roles in the 2008 financial crash. Both Deutsche Bank and Barclays agreed to pay more than $2 billion to settle their cases with the authorities while the Bank of America ended up paying $17 billion.
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