A sign and logo of the Swiss giant banking UBS is seen in Lausanne on February 6, 2024. Photo by Fabrice COFFRINI / AFP
Zurich: Swiss banking giant UBS said on Monday it agreed to pay $300 million in a deal with the US Department of Justice to settle a subprime crisis case it inherited from Credit Suisse.
Credit Suisse, which had reached a settlement with the DOJ in 2017, was taken over by UBS in 2023 following a series of scandals that led to the bank's collapse.
UBS said in a statement it was "pleased" to announce that it had reached an agreement with the DOJ to resolve the "legacy matter" related to Credit Suisse's mortgage-backed securities business.
"With this agreement, UBS has resolved another of Credit Suisse's legacy issues, in line with its intention to resolve legacy matters at pace in a fair and balanced way and in the best interest of all its stakeholders," Switzerland's biggest bank said.
Credit Suisse and other major banks sold mortgage-backed securities that were at the heart of the 2008 financial crisis.
Subprime mortgages, credit granted to borrowers often with poor credit histories or insufficient income, were packaged by banks into financial products and sold to investors.
But as borrowers defaulted on many of those mortgages, investors had no way of telling what portion of the loans in the derivatives were bad.
