UBS to pay $1.44 billion fine to settle US Justice Department mortgage securities case – Bloomberg

UBS Group AG has agreed to pay $1.44 billion to settle a longstanding case concerning US mortgage securities, addressing one of the bank's most significant unresolved legal issues amidst its integration efforts with Credit Suisse, as reported by Bloomberg. 

According to the publication, this amount had already been fully provisioned for in previous periods. The case pertains to a lawsuit brought forward by the US Department of Justice against UBS related to the issuance, underwriting, and sale of mortgage-backed securities produced in 2006 and 2007, as well as the release, underwriting, and sale of these securities.

The agreement concludes UBS's largest legal headache in the US. However, court proceedings concerning the Libor rate, swaps, equity lending platforms, and the Bernard Madoff fraud could cost around $400 million. The bank's existing legal liabilities, which also include a tax evasion case in France, now have claims related to its acquisition of Credit Suisse added.

Previously, UBS had stated that the legal liabilities associated with Credit Suisse could reach $4 billion over 12 months, with an asset write-down potentially nearing $13 billion. In June, UBS finalised the acquisition deal with its struggling rival, providing the Swiss bank with a potential windfall profit of tens of billions of dollars after government intervention.

In 2019, a federal judge in Brooklyn, New York, rejected UBS's plea to dismiss a lawsuit lodged by the Justice Department in 2018. The Department accused the bank of selling mortgage-backed securities worth tens of billions of dollars, "knowingly and repeatedly" making false and fraudulent statements to investors regarding the supporting loans.

Background. Mind previously reported that Switzerland's largest bank will be closing the accounts of the majority of its russian clients.