Credit Suisse Group AG is close to reaching an agreement to plead guilty and pay about US$2.5 billion to the US Department of Justice and regulators to resolve investigations into whether it helped Americans evade taxes, three people familiar with the matter said.
The Zurich-based bank is expected to pay about US$1.7 billion to the department, a minimum of US$600 million to the New York Department of Financial Services and US$100 million to the US Federal Reserve, said two of the people, who asked not to be identified because the matter is not public.
The proposed accord could be announced as early as next week, the people said.
“That seems higher than what everybody was anticipating,” said William Sharp, a US tax lawyer who splits his time between Switzerland and the US.
“It’s mutually beneficial for both the bank and the US government to put this dispute behind them. It’s been dragging on for many years and frankly could drag on for several more years,” Sharp said.
The parent company would plead guilty in federal court in Alexandria, Virginia, one of the people said.
A guilty plea by Credit Suisse’s parent company would be the first by a major global bank in the US in more than two decades.
Switzerland’s second largest bank would admit to a statement of facts still being negotiated, and the firm would not have to disclose the names of US account holders, the person said.
“It’s a phenomenal amount of money,” said Christopher Wheeler, a London-based analyst at Mediobanca SpA, adding that the bank’s Basel III common equity ratio would probably fall below the 10 percent level it reported for the end of March.
Credit Suisse is targeting a ratio above 11 percent.
“That’s not what you want when you’re trying to get cash back to shareholders, but this thing is becoming something that we just want to see the end of,” Wheeler said.
US Attorney General Eric Holder is seeking to blunt criticism from lawmakers that the Department of Justice considered large banks immune from prosecution after the 2008 financial crisis because of their size and importance to the economy.
Holder has been faulted for settlements that let banks escape criminal charges while paying fines, admitting wrongdoing and improving controls.
The US has not pressed criminal charges against a global bank’s holding company since the 1992 guilty plea of the Bank of Credit and Commerce International, once the seventh-largest closely held bank.
Banks including Credit Suisse, UBS AG, HSBC Holdings PLC and JPMorgan Chase & Co avoided convictions through settlements in recent years. While prosecutors have extracted guilty pleas from subsidiaries of some large banks, they have spared holding companies.
US authorities are also seeking more than US$3.5 billion from BNP Paribas SA to settle federal and state investigations into the Paris-based lender’s dealings with sanctioned countries including Sudan and Iran, according to people familiar with the matter.
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