Credit Suisse faces threat of new U.S. tax probe

Mon Apr 7, 2014 11:35am EDT
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By Silke Koltrowitz

ZURICH (Reuters) - Credit Suisse may face a new investigation of its role in helping wealthy Americans to avoid paying taxes, after New York state's top financial regulator requested documents from the Swiss bank.

Switzerland's second-largest lender had raised expectations it was emerging from its long-running American tax controversy when it set aside an extra half a billion dollars last week to deal with a U.S. Department of Justice investigation of its participation in offshore tax evasion.

But Benjamin Lawsky, New York's financial services superintendent, is now examining whether the bank lied to New York authorities about creating tax shelters, raising the possibility of another investigation, a source familiar with the matter told Reuters.

Shares in Credit Suisse dropped 2.6 percent to 28.69 Swiss francs in Zurich on Monday, underperforming the European benchmark, which was 1 percent weaker, as investors digested the possibility of a costly inquiry.

"There is still a lot of uncertainty around all these legal issues at Credit Suisse. Nobody can tell how much it will really cost in the end," said Peter Stenz, a portfolio manager of Swiss equities at Swisscanto, one of the 50 largest stakeholders in Credit Suisse.

Credit Suisse declined to comment.

The bank has so far set aside 895 million francs ($1 billion) to deal with tax and securities law matters in the United States - more than the $780 million Swiss rival UBS paid in 2009 to settle charges it sheltered U.S. citizens from taxes. The litigation charges have chipped away at Credit Suisse's financial cushion against future losses.

"They're able to pay dividends, but only just so. These worries weigh on the Credit Suisse investment case," said Rainer Skierka, an analyst at Bank J.Safra-Sarasin. "UBS is even further ahead now."   Continued...

(L-R) Credit Suisse officials CEO Brady Dougan, Robert Shafir and Hans Urlich-Mesiter are sworn in before the Senate Homeland and Governmental Affairs Investigations Subcommittee on Capitol Hill in Washington February 26, 2014. REUTERS/Gary Cameron