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MarketScreener Homepage  >  Equities  >  Swiss Exchange  >  Credit Suisse Group AG    CSGN   CH0012138530

CREDIT SUISSE GROUP AG

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Credit Suisse in talks to pay $1.6 billion to resolve U.S. tax probe - source

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05/05/2014 | 07:34pm EDT
Swiss bank Credit Suisse logo is seen in front of its headquarters in Zurich

WASHINGTON (Reuters) - Credit Suisse Group AG (>> Credit Suisse Group AG) is in talks with the U.S. Justice Department to pay as much as $1.6 billion (948 million pounds) to resolve an investigation into the bank's role in helping Americans evade U.S. taxes, a person familiar with the matter said on Monday.

WASHINGTON (Reuters) - Credit Suisse Group AG (>> Credit Suisse Group AG) is in talks with the U.S. Justice Department to pay as much as $1.6 billion (948 million pounds) to resolve an investigation into the bank's role in helping Americans evade U.S. taxes, a person familiar with the matter said on Monday.

Prosecutors have also been pushing for Credit Suisse to plead guilty in connection with the probe, two people with knowledge of the talks said.

A spokesman for Credit Suisse declined comment.

The penalty would exceed the 895 million Swiss francs ($1.02 billion) that Credit Suisse has set aside to pay potential penalties to the United States.

It's also much tougher than the settlement the Justice Department reached in 2009 with Swiss banking giant UBS AG (>> UBS AG), which was also accused of helping Americans dodge taxes.

In that settlement, UBS paid $780 million to settle similar charges, which is roughly half the amount being discussed for Credit Suisse, even though Credit Suisse's offshore private banking business was much smaller than UBS's.

Also, UBS was allowed to enter a deferred prosecution agreement and criminal charges were later dropped against the firm.

It is unclear what sort of impact a criminal plea could have on Credit Suisse. Historically, the Justice Department has rarely pursued criminal prosecutions against financial firms, especially global companies that could become destabilised following an indictment.

Much of the concern stems from the 2002 indictment and eventual demise of accounting giant Arthur Andersen, which led to the loss of about 25,000 jobs and greater consolidation in the industry.

But the Justice Department has recently taken a harder stance, in the face of criticism about its record.

The Justice Department on Monday morning posted a video in which Attorney General Eric Holder said close cooperation with regulators was paving the way for criminal actions against financial institutions, although he did not name specific banks.

"I intend to reaffirm the principle that no individual or entity that does harm to our economy is ever above the law," Holder said. "There is no such thing as 'too big to jail.'"

The Justice Department came under particularly intense fire from the Senate Permanent Subcommittee on Investigations, which in February accused the agency of not aggressively pursuing Swiss banks that helped Americans dodge taxes, including Credit Suisse.

U.S. lawmakers and influential U.S. District Judge Jed Rakoff of Manhattan have more broadly accused the Justice Department of shying away from high-level financial prosecutions.

'NO INTENTION OF DESTABILISING'

Credit Suisse in February agreed to pay $196 million to resolve a related case from the U.S. Securities and Exchange Commission, which accused the Swiss bank of providing brokerage and advisory services to U.S. clients without registering with the SEC.

In a sign of the delicate nature of the Justice Department negotiations, Switzerland's finance minister met with Holder in Washington on Friday to discuss the investigation of Swiss banks.

A Swiss ministry spokesman said the minister, Eveline Widmer-Schlumpf, was seeking "fair and equal treatment" of the Swiss banks involved in the probe.

That discussion followed a meeting U.S. Justice Department officials held with U.S. regulators last month to make sure that a criminal plea would not cripple the bank's ability to do business in the United States, a person familiar with the matter said.

A Swiss government source said on Monday that the most likely result from the recent negotiations is a guilty plea from Credit Suisse.

"My impression is that it will go quickly and it could be in the coming weeks," the Swiss government source said.

The source added that the Justice Department is being careful to minimize any unintended ripple effects of a guilty plea. "The DOJ has no intention of destabilising Credit Suisse," the source said.

(Reporting by Mark Hosenball and Aruna Viswanatha, with additional reporting from Oliver Hirt and Josh Franklin; Editing by Karey Van Hall, Peter Cooney and Cynthia Osterman)

By Mark Hosenball and Aruna Viswanatha

Stocks treated in this article : Credit Suisse Group AG, UBS AG
Stocks mentioned in the article
ChangeLast1st jan.
CREDIT SUISSE GROUP AG -0.13% 9.108 Delayed Quote.-30.41%
RIPPLE (XRP/BTC) 0.00% 2.2E-5 Real-time Quote.-15.38%
RIPPLE (XRP/EUR) -0.37% 0.1985 Real-time Quote.17.42%
RIPPLE - UNITED STATES DOLLAR -0.50% 0.231565 Real-time Quote.23.07%
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Financials
Sales 2020 21 688 M 23 509 M 23 509 M
Net income 2020 2 994 M 3 245 M 3 245 M
Net Debt 2020 - - -
P/E ratio 2020 7,59x
Yield 2020 3,16%
Capitalization 21 280 M 23 144 M 23 067 M
Capi. / Sales 2020 0,98x
Capi. / Sales 2021 0,99x
Nbr of Employees 48 800
Free-Float 95,2%
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Mean consensus OUTPERFORM
Number of Analysts 20
Average target price 12,24 CHF
Last Close Price 9,12 CHF
Spread / Highest target 86,4%
Spread / Average Target 34,2%
Spread / Lowest Target -21,6%
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NameTitle
Thomas Gottstein Chief Executive Officer
Urs Rohner Chairman
James Walker Chief Operating Officer
David Richard Mathers Chief Financial Officer
John Ivan Tiner Independent Non-Executive Director
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