The Swiss bank cautioned that it may exhaust its legal provisions in a long-running U.S. court dispute. It is the second hefty write-down this quarter for Credit Suisse.
Zurich-based Credit Suisse has been locked in a legal battle with bond insurer MBIA since 2009 over guarantees on U.S. residential mortgage-backed securities, or RMBS. In a setback, the Swiss bank now faces a judgement of as much as $680 million, it said in a statement on Tuesday.
This is more than double the $300 million it has until now set aside to settle the case. It said it is confident that it has grounds for appeal to a judgement overnight, which ruled on estimates from both MBIA and Credit Suisse on damages.
Kissed-Off Hedge Fund
The bank said it «expects to increase its RMBS-related provisions as a consequence of this order,» but did not actually do so. It said it will update investors on the financial impact against the current quarter «in due course».
Credit Suisse, which separately on Tuesday nominated Antonio Horta-Osório as its next chairman, is already kissing off as much as $450 million this quarter from York Capital Management. The U.S. hedge fund is withdrawing from most of Europe, sparking the move.
