Credit Suisse to pay $536 mln for U.S. violations

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Swiss banking giant Credit Suisse Group AG will pay $536 million for violating U.S. law by conducting business with Iran and other sanctioned countries, U.S. prosecutors said on Wednesday.

Documents filed in federal court in Washington said Credit Suisse moved more than $1.6 billion through the U.S. financial system on behalf of Iran, Sudan, Myanmar, Cuba and Libya.

The documents outlined the violations and the settlement, known as a deferred prosecution agreement, which ended a five-year investigation by U.S. authorities.

Credit Suisse shares were up 4.9% at USD 50.60 in afternoon trading on the New York Stock Exchange.

According to the court documents, the Swiss bank may have begun evading U.S. sanctions as early as 1986, when sanctions on Libya were first imposed.

The bank was specifically charged with "knowingly and willfully" attempting to violate regulations issued under the International Emergency Economic Powers Act from mid-1995 through about 2006.

Credit Suisse's "internal communications showed a continuous dialogue about evading U.S. sanctions spanning approximately a decade," the documents alleged.

In a statement, Credit Suisse said it was committed to the highest standards of integrity and took "this matter extremely seriously." It said it had carried out a investigation and ended business with the sanctioned countries by 2007.

The settlement is the second reached by a Swiss bank with U.S. authorities this year. Credit Suisse rival UBS AG agreed in February to pay USD 780 million to avoid criminal charges for helping about 50,000 rich Americans evade taxes.

Earlier this year, Britain's Lloyds TSB Group Plc agreed to forfeit USD 350 million to U.S. authorities in connection with charges it faked records so clients from Iran, Sudan and elsewhere could do business with the US banking system.

That case was similar to the one involving Credit Suisse.

Credit Suisse first disclosed the probe in 2007.

Other banks could be involved

Analysts in Europe said the settlement should only do short-term damage to the Swiss bank, but other banks could now be in the line of fire.

Other banks that have highlighted potential risks from U.S. economic sanctions in the past include Royal Bank of Scotland Group Plc and Barclays Plc.

In Zurich, a source who declined to be identified said nine banks were involved and that four had settled, including Lloyds and Credit Suisse.

Credit Suisse, which avoided state aid and emerged as one of the banking sector winners from the financial crisis, said the expected settlement would likely result in a 445 million Swiss franc ($429 million) charge this quarter, or about 360 million francs after tax.

After strong interim earnings this year, fourth-quarter results were expected to be weak due to the charge and an expected slowdown in private bank inflows due to an Italian tax amnesty, said Kepler Capital Markets analyst Mathias Bueeler.

"While we are a bit surprised about the size of the amount, this is a one-off payment that should have no further implications on Credit Suisse's business or franchise," Bueeler said.

Credit Suisse has to pay the $536 million within five business days, according to the court documents.

The settlement, which includes $268 million in forfeited funds to the U.S. government and $268 million under a separate agreement with the Manhattan District Attorney's office, is subject to court approval.

Later on Wednesday, Manhattan District Attorney Robert Morgenthau plans to announce that agreement with Credit Suisse "in which the Swiss bank admits to violating New York State law by falsifying the records of New York financial institutions," his office said.

Prosecution of the bank will be deferred for two years in exchange for the company's cooperation, the documents stated.