Credit Suisse has increased the funds it has set aside to settle a U.S. tax dispute and avoid prosecution for helping wealthy Americans hide cash from the taxman, raising the prospect it may be close to a settlement in the lengthy dispute.
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The bank set aside an extra 425 million Swiss francs ($480 million) to take its total provisions for tax and securities law matters in the United States to 895 million francs, it said in its annual report published on Thursday.
Credit Suisse was told by the U.S. Department of Justice it was under investigation in 2011. The bank made a 295 million franc provision that year, but many analysts believed that sum would not suffice.The indicated 895 million francs total reserve would, on the same conversion rate (480$/425 Swiss francs), be over $1 billion USD. I previously reported on a penalty for the securities violation. See Credit Suisse Take a Hit on U.S. Tax Evasion Business (Federal Tax Crimes Blog 2/21/14), here. That hit was $197 million. It is not clear that the 895 million francs includes this amount, but for purposes of analysis,, we'll say it does. That means that Credit Suisse expects the nonsecurities tax related hit to exceed $800 million, which would mean that the apples to apples cost to Credit Suisse exceeds UBS's $780 million costs in 2009.