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. U.S. prosecutors said Credit Suisse helped clients conceal assets in secret accounts that were not disclosed to U.S. tax authorities, in a conspiracy that spanned decades, and for one of the bank's units, involved practices that began more than a century ago. "This case shows that no financial institution, no matter its size or global reach, is above the law," Attorney General Eric Holder said at a news conference in Washington. "We deeply regret the past misconduct that led to this settlement," Credit Suisse Chief Executive Officer Brady Dougan said in a statement.
Another global bank, BNP Paribas, is expected to submit to a similar plea as it works to resolve a criminal probe into whether it violated U.S. sanctions on Sudan and other countries, people familiar with the matter have said. Credit Suisse will pay the penalties to the U.S. Department of Justice, Internal Revenue Service, Federal Reserve and New York State Department of Financial Services. It had already paid just under $200 million to the Securities and Exchange Commission. Switzerland's left-wing Social Democrats renewed a call first made last week for Dougan and other executives to step down to allow the bank to make a fresh start. Asked whether he had considered such a move, Dougan, a 24-year veteran of the bank who took over as CEO in 2007, said resignation had "never been a consideration" and he remained committed to the bank.
New York bank regulators discussed replacing Dougan and others, a source familiar with the negotiations said. But in the end, the option was not made a condition of the deal. "We'll see how it all shakes out," Benjamin Lawsky, who heads the New York Department of Financial Services, said on Tuesday after declining to comment on any negotiations about upper management. "In the short term, it's important that there be some stability at the firm as they get through this period." The Swiss government said its main concern was that Credit Suisse was managed well and could move on, and that any change in leadership "wasn't the concern of politics." The bank's chairman, Urs Rohner, told Swiss radio on Tuesday that he and CEO Dougan personally had a clean record, but the same could not be said for the bank's behavior in past decades. Switzerland's regulator effectively cleared the two, saying it had found no evidence that Credit Suisse top management knew of specific misconduct.
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