Credit Suisse sets aside $850m for mortgage securities

Credit Suisse said it would post a fourth-quarter loss after the Swiss bank set aside an extra $850m (£625m) for litigation linked to residential mortgage-backed securities stretching back to the financial crisis.

The provision takes the total set aside by the bank for a dispute with financial group MBIA to more than $1.1bn. Along with an impairment charge related to the bank's interest in York Capital Management the provision will cause a net loss in the fourth quarter, Credit Suisse said.

At the end of November a US judge ruled on a case related to mortgage securities issued in 2007 that could cost Credit Suisse up to $680m. The case between Credit Suisse and MBIA has been active since 2009.

Credit Suise said it believed it had strong grounds to appeal against the ruling but that it decided in December to review provisions for the possible impact.

"This review is now concluded, and we expect to increase our provisions for the MBIA case and other RMBS-related cases by a total of $850m," the bank said in an update. Credit Suisse shares fell 2.9% to 12.20 Swiss francs at 09:41 GMT.

Trading in the final month of 2020 was in line with earlier in the quarter, the bank said. Investment bank revenue rose more than 15% in the fourth quarter from a year earlier and in wealth management more transactions partly offset the effect of the stronger Swiss franc and pressure on net interest income.