Credit Suisse Announces Settlement of FHFA Litigation Relating to Mortgage-backed Securities Purchased by Fannie Mae and Freddie Mac between 2005 and 2007
Credit Suisse today announced that it has entered into an agreement with the Federal Housing Finance Agency (FHFA). As a result of this settlement, Credit Suisse Group AG will incur an after tax charge in respect of its 4Q13 and full-year 2013 financial results of CHF 275 million.
The agreement announced today with the Federal Housing Finance Agency (FHFA), as conservator for Fannie Mae and Freddie Mac, settles claims pending in the United States District Court for the Southern District of New York related to the sale of approximately USD 16.6 billion of residential mortgage-backed securities between 2005 and 2007. Under the terms of the agreement, Credit Suisse will pay USD 885 million to resolve all claims in two pending securities lawsuits filed by FHFA against Credit Suisse: FHFA v. Credit Suisse, et al. and FHFA v. Ally Financial Inc., et al. This agreement resolves Credit Suisse’s largest mortgage-related investor litigation.
As this agreement occurred prior to the filing of Credit Suisse Group’s 2013 Annual Report scheduled for April 3, 2014, applicable accounting standards require recognition of a charge of CHF 275 million after tax in the 2013 financial statements. Adjusting the preliminary financial results announced on February 6, 2014 for this charge, the reported 4Q13 net loss was CHF 8 million. For the full year 2013, making the same adjustment, reported core results pre-tax income was CHF 3,994 million, compared to CHF 1,888 million in 2012, and reported 2013 net income attributable to shareholders was CHF 2,794 million, compared to CHF 1,349 million in 2012.
Credit Suisse’s Look-through Total Capital ratio after reflecting this charge was 15.9%, the Look-through Basel III CET1 ratio was 10.2%, and the Basel III CET1 ratio was 15.9% as of the end of 2013.
Credit Suisse Group is due to publish its final audited 2013 financial statements as part of the Annual Report on April 3, 2014. A final version of the 4Q13 interim report will be published at that time.