Credit Suisse expects to increase its provisions for its legal battle with MBIA and other US residential mortgage-backed security related cases by a total of $850m (CHF 754m), it announced on Friday. This is in addition to the $300m it previously set aside in provisions concerning this case.
While Credit Suisse thinks it has strong grounds to appeal, on 30 November, the judge presiding over the case issued an order requiring both parties to submit estimates of damages, which could result in a judgement against Credit Suisse costing up to approximately $680m.
Credit Suisse expects to record a net loss in the fourth quarter of 2020 because of this provision and the expected impairment of $450m from its non-controlling interest in York Capital Management, which was announced in November. The alternative investment firm is winding down its hedge fund business.
The banking giant has also been charged with money laundering by Switzerland’s federal prosecutor. It said in December that it ‘intends to defend itself vigorously’ against allegations that the firm had processed over CHF 140m in transactions for a Bulgarian drug ring without ‘reasonable and required’ guards.
In its update on the US court case, Credit Suisse also said that its annual general meeting on 30 April will be held without the physical attendance of shareholders and that its programme to buy back between CHF 1bn and CHF 1.5bn of shares in 2021 will commence on Tuesday.