S&P has downgraded Basler Kantonalbank's "senior unsecured debt rating" because of the ongoing Swiss bank spat with the U.S., citing "the risk of a 'material' one-time legal cost." Giles Broom, Swiss Cantonal Bank Cut by S&P Amid Risk of U.S. Legal Costs (BloombergBusinessweek 8/6/13), here. Key excerpts:
“We foresee ongoing elevated reputational and legal risk at BKB from pending legal actions by the U.S. Department of Justice against Swiss banks,” S&P said after meeting with the management of the company. “We have factored into our assessments a material one-time legal cost for BKB.”
The Department of Justice is investigating banks, including Credit Suisse Group AG (CSGN) and Julius Baer Group Ltd. (BAER), after last year indicting Wegelin & Co. UBS AG, Switzerland’s largest bank, avoided prosecution in 2009 by paying $780 million, admitting it aided U.S. tax evasion and handing over data on 4,500 accounts. S&P didn’t disclose a figure for Basler’s legal costs, which the ratings company said would be offset by earnings.
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