* C.Suisse does not expect "material" business fallout
* Plans to pay out roughly half of profits from 2014
* Credit Suisse will not hand over client data to U.S.
* CEO Dougan, other top executives survive calls to step
* Shares up 0.96 percent
(Adds Breakingviews link)
By Katharina Bart, Karen Freifeld and Aruna Viswanatha
WASHINGTON/NEW YORK/ZURICH, May 20 Credit Suisse
saw little immediate impact on Tuesday after it became
the largest bank in decades to plead guilty to a U.S. criminal
charge and will pay more than $2.5 billion in penalties for
helping Americans evade taxes.
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
"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
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.
Credit Suisse will take an after-tax charge of 1.6 billion
Swiss francs ($1.79 billion) in the second quarter for the fine,
which dwarfs a $780 million penalty Swiss rival UBS AG
paid to settle a U.S. tax dispute in 2009.
To appease investors, the bank will begin paying out roughly
half its profits to shareholders once it hits a key capital
ratio. It will also reduce assets, sell real estate and take
other actions to help to meet the 10 percent capital ratio,
which it expects to achieve by year-end.
"We see the size of the fine as affordable given the high
ROE (return on equity) of Credit Suisse's businesses," Nomura
analyst Jon Peace said. Peace, who rates the stock as a "buy,"
said the payout guidance gave the bank a yield premium compared
to the sector.
The United States has been trying to wrest client data from
Swiss banks in a long-standing fight with Switzerland and its
bank secrecy laws. The standoff has already forced Wegelin & Co,
the oldest Swiss private bank, to close shop after a guilty plea
to charges of helping U.S. clients evade taxes.
Credit Suisse, which has a large business managing wealthy
clients' money, helped them withdraw funds from their undeclared
accounts by either providing hand-delivered cash to the United
States or using Credit Suisse's correspondent bank accounts in
the United States, the Justice Department said.
Prosecutors said Credit Suisse had around 22,000 U.S. client
accounts worth around $10 billion, which included both declared
and undeclared accounts, although the bank will not hand over
any data of its American clients as part of the deal.
Bank account data, protected by Swiss secrecy laws, has
proven a sticking point in the Credit Suisse probe and in the
wider U.S. crackdown on the industry.
Credit Suisse's plea raises questions about roughly a dozen
other Swiss banks including Julius Baer and Bank
Pictet & Cie, also under criminal investigation in the United
New York's banking regulator said it would place a monitor
of its choosing inside Credit Suisse, while the Fed said it was
investigating whether other individuals should be subject to
actions such as fines or bans. It did not name the individuals.
($1 = 0.8916 Swiss Francs)
(Reporting by Aruna Viswanatha in Washington, Karen Freifeld in
New York, Katharina Bart and Oliver Hirt in Zurich, Joshua
Franklin, Paul Arnold and Ruben Sprich in Bern; Additional
reporting by Dan Wilchins and Richard Leong in New York and
Douwe Miedema in Washington; Writing by Douwe Miedema; Editing
by Jane Merriman, Lisa Shumaker and Richard Chang)