Credit Suisse Group AG is in talks with the US Department of Justice (DOJ) to pay as much as US$1.6 billion to resolve an investigation into the bank’s role in helping US citizens evade taxes, a person familiar with the matter said on Monday.
Prosecutors have also been pushing for Credit Suisse to plead guilty in connection with the probe, two people with knowledge of the talks said.
A spokesman for Credit Suisse declined to comment.
The penalty would exceed the 895 million Swiss francs (US$1.02 billion) that Credit Suisse has set aside to pay potential penalties to the US.
It is also much tougher than the settlement the department reached in 2009 with Swiss banking giant UBS AG , which was also accused of helping US citizens dodge taxes.
In that settlement, UBS paid US$780 million to settle similar charges, which is roughly half the amount being discussed for Credit Suisse, even though Credit Suisse’s offshore private banking business was much smaller than UBS’.
UBS was also allowed to enter a deferred prosecution agreement and criminal charges were later dropped against the firm.
It is unclear what sort of impact a criminal plea could have on Credit Suisse. Historically, the justice department has rarely pursued criminal prosecutions against financial firms, especially global companies that could become destabilized following an indictment.
Much of the concern stems from the 2002 indictment and eventual demise of accounting giant Arthur Andersen, which led to the loss of about 25,000 jobs and greater consolidation in the industry.
However, the justice department has recently taken a harder stance, after criticism of its record.
The department on Monday posted a video in which US Attorney General Eric Holder said close cooperation with regulators was paving the way for criminal actions against financial institutions, although he did not name specific banks.
“I intend to reaffirm the principle that no individual or entity that does harm to our economy is ever above the law,” Holder said. “There is no such thing as ‘too big to jail.’”
Credit Suisse in February agreed to pay US$196 million to resolve a related case from the US Securities and Exchange Commission, which accused the Swiss bank of providing brokerage and advisory services to US clients without registering with the commission.
In a sign of the delicate nature of the justice department negotiations, Swiss Finance Minister Eveline Widmer-Schlumpf met with Holder in Washington on Friday to discuss the investigation of Swiss banks.
A Swiss ministry spokesman said Widmer-Schlumpf was seeking “fair and equal treatment” of the Swiss banks involved in the probe.
A Swiss government source said on Monday that the most likely result from the recent negotiations is a guilty plea from Credit Suisse.
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