The Swiss bank said that sharply higher reserves to fight a U.S. legal battle over mortgage securities will tip it to a fourth-quarter loss.
Zurich-based Credit Suisse is adding $850 million to its provisions for a fight over guarantees on residential mortgage-backed securities, it said in a statement on Friday. This nearly triples its existing $300 million reserves for the matter, which includes a battle with with bond insurer MBIA.
The legal tussle as well as a write-down on its major stake in hedge fund York will tip Credit Suisse to a fourth-quarter net loss when it reports the quarter on February 18, it said. Credit Suisse last month proposed Lloyds CEO Antonio Horta-Osório as its next chairman.
Hedge Fund Hit
The quarter finished off with stronger activity in its private bank, it said, alleviating some pressure from the strong Swiss franc against other major currencies. Its investment bank hiked revenue by more than 15 percent on the year.
Credit Suisse is already kissing off as much as $450 million this quarter from York, the result of the U.S. hedge fund withdrawing from most of Europe. The bank said it still believes it has strong grounds for an appeal of the RMBS case.
