UBS Group AG agreed to pay $300 million to settle a mortgage-related case with the U.S. Department of Justice as it continues to work down the list of legal issues it inherited when it bought Credit Suisse in early 2023.
The Zurich-based bank said the decision will resolve all of the outstanding payments owed from a settlement on the matter originally made by Credit Suisse in 2017, according to a statement on Monday. A number of lenders had faced claims over the sale of mortgage securities that plummeted in value during the 2008 financial crisis. The banks faced allegations that they misrepresented the quality of the home loans underpinning these securities in order to win buyers, exacerbating the impact of the sub-prime mortgage collapse.
UBS said it expects Monday’s announcement to have a positive impact on its third quarter results as it plans to recognize a credit in the bank’s non-core unit as a result of the release of the contingent liability.
In May, UBS agreed to pay $511 million to settle a separate U.S. investigation into how Credit Suisse Group helped rich Americans evade taxes. Monday’s announcement ticks off another matter, with the cost to settle further legacy cases including the fallout from the collapse of Archegos Capital Management in 2021 estimated by Bloomberg Intelligence at around $500 million. The amount is less than Bloomberg Intelligence expected, and makes up a significant portion of the estimated $1.5 billion in contingent liabilities related to the purchase of Credit Suisse.
UBS shares were down 0.5% at 11:24 a.m. on Monday, broadly in line with the Swiss Market Index, which had slumped in early trading on worries about the impact from US President Donald Trump’s punitive 39% export tariff. In 2023, UBS agreed to pay $1.44 billion to settle its own long-running case over US mortgage-backed securities, which was one of the bank’s biggest legal headaches at the time.
