Wednesday, May 21, 2014

Credit Suisse Update - The Aftermath for Credit Suisse #1 (5/21/14)

I offer links to and excerpts from a few articles:

Mary Jacoby, Credit Suisse Guilty Plea - What's the Big Deal? (Main Justice 5/20/14), here.

The article provides a brief summary of the background and the event of the guilty plea.  The author concludes after noting the DOJ's concerted effort that, other than paying the monetary amounts and the loss to reputation, there would be no ill effects to Credit Suisse:
But isn't the treat of being obliterated supposed to have been the very incentive for big banks and other companies not to commit crimes? 
Now that we have a new precedent for preserving big banks' rights to operate despite criminal charges, I'm having a hard time understanding what's change.
Jenny Anderson, Credit Suisse Investors Shrug Off Tax Plea (NYT DealBook 5/20/14), here.

The article starts:
A day after Credit Suisse pleaded guilty to tax evasion in the United States, the Swiss bank says that it is able to conduct its business as normal despite its criminal conviction. Swiss officials and investors seemed to welcome the fact that the resolution allows the bank to put the matter behind it.
Katharina Bart, Karen Freifeld, and Aruna Viswanatha, Credit Suisse guilty plea has little immediate impact as shares rise (Reuters 5/20/14), here.
While we expect that this event has been well-flagged and the impact likely to be muted, there is always the small risk of unintended consequences," Citigroup analysts Kinner Lakhani and Nicholas Herman wrote in a note to investors. 
* * * * 
To appease investors, the bank will begin paying out roughly half its profits to shareholders once it hits a key capital ratio. It will also reduce assets, sell real estate and take other actions to help to meet the 10 percent capital ratio, which it expects to achieve by year-end. 
"We see the size of the fine as affordable given the high ROE (return on equity) of Credit Suisse's businesses," Nomura analyst Jon Peace said. Peace, who rates the stock as a "buy," said the payout guidance gave the bank a yield premium compared to the sector.
JAT Comment:  Just a cost of doing business?

Added 5/21/14 5:25pm:

Peter Eavis, In Credit Suisse Settlement, a Question of Justice (NYT Dealbook 5/21/14), here.  Excerpts:

I won't excerpt this.  I recommend that readers of this blog read the whole article.


  1. Actually, the CS [in]action by DoJ may be far worse than doing the usual nothing, as many media reports have noted: now that banks know the indictment is meaningless where's the deterrent?

    And didn't Bradley Dougan perjure himself before the Senate when he swore the CS malfeasance was narrowly limited to a small renegade CS unit? Or is the Statement of Facts the lie here?

    Either Dougan and his fellow executives knew about what was going on and he should be removed (or course they did--otherwise they couldn't admit to the Statement of Facts). Or they didn't (suspending disbelief for a nano second), in which case they are incompetent and shouldn't be managing a major bank. Either case why did DoJ let them away with it. Malodorous!

    When are Holder and Keneally moving over to join Lanny Breuer at Covington & Burling?

  2. Though CS didn't give client names apparently they are giving statistical data about the accounts so that a group request can be crafted.


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