NEW YORK/WASHINGTON New York state's banking regulator is seeking hundreds of millions of dollars from Credit Suisse in its probe of potential tax evasion involving the Swiss bank, according to sources close to the matter, which could push an eventual settlement with U.S. authorities over $2 billion.
The New York regulator made an opening bid of $1 billion, one of the sources said, though negotiations are expected to significantly drive down the final penalty amount.
The settlement with the New York State Department of Financial Services would be in addition to the fine that Credit Suisse is discussing with the U.S. Justice Department. Reuters reported last week that the Justice Department is seeking as much as $1.6 billion from the bank.
The talks between Credit Suisse and Benjamin Lawsky, New York's financial services superintendent, are ongoing, people familiar with the matter said. Credit Suisse could reach a deal with New York and federal authorities in the coming days, they said.
Federal prosecutors have also been pushing for the bank to plead guilty to criminal charges as part of the settlement, as the U.S. Justice Department has faced criticism that it has shied away from prosecuting financial firms.
Spokesmen from Credit Suisse and Lawsky's office declined comment.
The Swiss bank is eager to move past the long-running probe by the Justice Department into whether it helped thousands of Americans evade U.S. taxes.
Credit Suisse Chairman Urs Rohner told shareholders last week, "We are doing everything we can to resolve this matter within the given framework of U.S. and Swiss law, in the best possible way and in a timely manner."
New York authorities opened their investigation earlier this year in the wake of a damning U.S. Senate report that accused Credit Suisse bankers of secretly traveling to the United States to recruit clients.
The Senate report said Credit Suisse's practices facilitated tax evasion against the United States for years. By 2008 the bank had over 1,800 Swiss bankers who were handling one or more U.S. clients, according to the report.
In total Credit Suisse opened Swiss accounts for more than 22,000 U.S. customers with combined assets of as much as $12 billion, the report said.
In April the Lawsky's office ordered Credit Suisse to turn over employment and other records as it examined whether the bank lied to New York authorities about creating tax shelters.
The bank agreed in February to pay $196 million to resolve a related case from the U.S. Securities and Exchange Commission.
(Reporting by Aruna Viswanatha and Karen Freifeld, Editing by Karey Van Hall and Sandra Maler)