UBS Increases Credit Suisse's Remaining Obligations in the United States
UBS, a Swiss banking giant, has reached an agreement with the U.S. Department of Justice (DOJ) to settle a legacy residential mortgage-backed securities (RMBS) issue tied to Credit Suisse. The settlement, announced on Monday, will see UBS pay $300 million in August 2025[1][2].
This payment resolves all of Credit Suisse’s remaining consumer relief obligations from a 2017 Justice Department settlement regarding Credit Suisse’s conduct between 2005 and 2007 in packaging, securitizing, and selling RMBS that contributed to the 2008 financial crisis[1][3].
The RMBS in question date back to the 2008 financial crisis. In January 2017, Credit Suisse settled with the U.S. DOJ for $5.28 billion over allegations that it knowingly securitized poor-quality mortgage loans and misled investors about risks tied to RMBS before the global financial crisis[1][3]. The settlement comprised a $2.48 billion civil penalty and $2.8 billion in consumer relief measures.
UBS acquired Credit Suisse in 2023 and had itself settled its own RMBS case with the DOJ the same year for about $1.44 billion[3][5].
The $300 million payment by UBS represents the final step in resolving Credit Suisse’s outstanding legacy mortgage securities liabilities and consumer relief obligations from the 2017 settlement[1][2]. UBS indicated this settlement would lead to a credit in its non-core and legacy segment, reflecting the release of a contingent liability it established during its acquisition of Credit Suisse—suggesting the matter was anticipated and provisioned for in UBS’s financials[1][4].
This resolution helps UBS clean up legacy legal and financial risks tied to Credit Suisse, allowing the merged entity to move forward with reduced uncertainty related to past misconduct[1]. The settlement highlights the ongoing financial and reputational costs institutions face for their pre-crisis RMBS practices and the long-lasting regulatory scrutiny stemming from the 2008 financial crisis[1][2][3].
In essence, UBS’s $300 million payment resolves Credit Suisse’s unfinished mortgage-backed securities consumer relief obligations from the 2017 DOJ settlement, closing a significant chapter in the banks’ legacy legal issues related to the 2008 financial crisis. This facilitates legal and financial clarity for UBS following its 2023 acquisition of Credit Suisse[1][2][3].
References:
- UBS to pay $300 million to settle legacy mortgage securities issue with U.S. Justice Department
- UBS to pay $300 million to settle legacy mortgage securities issue with U.S. Justice Department
- UBS agrees to pay $300 million to settle legacy mortgage securities issue with U.S. Justice Department
- UBS to pay $300 million to settle legacy mortgage securities issue with U.S. Justice Department
- UBS to pay $300 million to settle legacy mortgage securities issue with U.S. Justice Department
UBS's payment of $300 million in 2025 will be directed towards resolving the remaining consumer relief obligations from Credit Suisse's 2017 settlement with the U.S. Department of Justice, which involved a substantial part of Credit Suisse's financial resources allocated towards addressing legacy mortgage-backed securities issues. This transaction is expected to contribute to UBS's financials by way of a credit in its non-core and legacy segment, as it represents the final step in addressing these long-standing legal and financial risks.
