Credit Suisse guilty plea has little immediate impact as shares rise

Tue May 20, 2014 5:16pm EDT
 
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By Katharina Bart, Karen Freifeld and Aruna Viswanatha

WASHINGTON/NEW YORK/ZURICH (Reuters) - Credit Suisse saw little immediate impact on Tuesday after it became the largest bank in decades to plead guilty to a U.S. criminal charge and will pay more than $2.5 billion in penalties for helping Americans evade taxes.

The bank's guilty plea resolves its long-running dispute with the United States over the probe and marks a rare criminal indictment for a major financial institution.

The Justice Department has not often pursued such convictions for fear they could destabilize large financial firms and wider markets, but lawmakers have recently pressured authorities to show that banks are not "too big to jail."

Credit Suisse said it had not seen a material impact in the past few weeks on its business, and that clients faced no legal obstacles from doing business with it despite the guilty plea.

But some analysts said clients and counterparties could still pull their business in the coming weeks.

"While we expect that this event has been well-flagged and the impact likely to be muted, there is always the small risk of unintended consequences," Citigroup analysts Kinner Lakhani and Nicholas Herman wrote in a note to investors.

Credit Suisse shares closed up 0.96 percent on Tuesday.

Switzerland's second-largest bank escaped more dramatic outcomes for its business - the New York state bank regulator decided not to revoke the bank's license in the state. Also, its top management stayed in place and it will not have to hand over specific client data, protected by Swiss secrecy laws, though it will turn over some account information.   Continued...

 
The logo of Swiss bank Credit Suisse is seen on an office building in Zurich May 20, 2014. REUTERS/Arnd Wiegmann