(AOF) – Credit Suisse Group has entered into a definitive agreement with the New Jersey Attorney General (NJAG) regarding its residential mortgage-backed securities (RMBS) business, whose transactions date back to before 2008.
Under the terms of the agreement, the Swiss bank will pay $495 million to fully resolve claims related to more than $10 billion of RMBS in question, for which the New Jersey attorney general had requested more than $3 billion. damages in a complaint filed in 2013. This amount is fully provisioned.
Credit Suisse said it was pleased to have reached an agreement allowing it to resolve the only remaining RMBS case involving claims from a regulator. It was also the largest unresolved subprime case.
“The settlement (…) marks another important step in the bank’s efforts to proactively resolve disputes and legacy issues,” said Credit Suisse.
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The negative effects of rising interest rates
The rise in interest rates normally causes an increase in bank income through the loans granted. In Europe, according to a survey conducted by S&P among 85 banking establishments, the sector expects an average increase of 18% in its net interest income. However, this new inflationary context also has undesirable effects, in particular an increase in refinancing costs. It is also accompanied by the fear of a new recession, which would then affect all the bank’s businesses, ranging from loans to asset management, whose income is correlated to market valuations. Reassuring element: the banks of the euro zone are sufficiently solid to face a deterioration of their environment.