By John Letzing
ZURICH-- Credit Suisse Group AG said late Friday an increase in
legal provisions related to U.S. mortgage issues has slashed
reported profit at the Swiss bank for the fourth quarter.
"Developments in industry-wide litigation and investigations in
the United States relating to mortgages" have spurred Credit Suisse
to increase litigation provisions by 277 million Swiss francs ($290
million), the Zurich-based bank said in a statement. Credit Suisse
said that due to charges resulting from the change, it is now
reporting a net profit of 691 million francs for the period,
compared with the 921 million francs it had reported earlier this
month.
The bank's initial reporting of fourth-quarter results had been
generally well received, and helped to send its shares sharply
higher.
Credit Suisse previously settled U.S. mortgage-related
litigation last year with the Federal Housing Finance Agency, which
alleged that the bank misrepresented mortgage-backed securities
sold before the financial crisis, for $885 million. That settlement
also retroactively took a bite out of the bank's
previously-reported financial results for the prior year.
The bank has been the target of a number of other legal actions
in the U.S. related to its sale of mortgage-backed securities, in
various states.
In 2012, New York's attorney general sued the bank, alleging
that it misrepresented the quality of the loans in its
mortgage-backed securities sold before the financial crisis. By
mid-2012, losses incurred in residential mortgage-backed securities
sponsored by Credit Suisse in 2006 and 2007 totaled more than $11.2
billion, the attorney general's office said in a statement at that
time.
Write to John Letzing at john.letzing@wsj.com
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