* Bank double provisions for U.S. tax matters to 895 mln Sfr
* Books 468 mln Sfr charge in Q4 for litigation provisions
* Results in a fourth-quarter net loss of 476 mln Sfr
* CEO Dougan's pay rises 26 pct to 9.8 million francs
(Adds detail and background on Dougan's pay)
By Caroline Copley and Oliver Hirt
ZURICH, April 3 Credit Suisse has
increased the funds it has set aside to settle a U.S. tax
dispute and avoid prosecution for helping wealthy Americans hide
cash from the taxman, raising the prospect it may be close to a
settlement in the lengthy dispute.
Switzerland's second-biggest bank also said it had raised
the pay of its chief executive by more than a quarter last year,
despite not meeting all its performance targets and the hike in
litigation costs which increased its fourth-quarter loss.
The bank set aside an extra 425 million Swiss francs ($480
million) to take its total provisions for tax and securities law
matters in the United States to 895 million francs, it said in
its annual report published on Thursday.
Credit Suisse was told by the U.S. Department of Justice
(DoJ) it was under investigation in 2011. The bank made a 295
million franc provision that year, but many analysts believed
that sum would not suffice.
"The final settlement has not yet been reached, but the bank
feels comfortable about making a provision for the case that
should be close to the final settlement amount," analyst Dirk
Becker at brokerage Kepler Cheuvreux, who has a "buy" rating on
the stock, said in a note. He said the provisions were less than
had been expected by the market.
Another analyst, who asked not to be named, said the
additional provision suggested a settlement looked more
imminent. But a spokesman for the bank declined comment on
whether the increase indicated it was close to resolving the
Credit Suisse had in February settled charges levied by the
U.S. Securities and Exchange Commission, admitting to wrongdoing
and paying $196.5 million in fines also in relation to tax
Switzerland's private banking model has been rattled to its
core by the U.S. crackdown on tax evasion. Credit Suisse's
crosstown rival UBS admitted to helping U.S. taxpayers
evade taxes and paid a $780 million fine in 2009.
Evidence culled from the UBS probe and thousands of
Americans coming forward under a tax amnesty in the United
States has fed a second wave of investigation, which has
ensnared Credit Suisse and 13 other large Swiss banks.
Wegelin & Co, the oldest Swiss private bank, was forced to
close last year following a guilty plea to charges of helping
wealthy Americans evade taxes.
Credit Suisse is the latest Swiss company to raise executive
pay ahead of next year, when shareholders in the Alpine state
will have a binding vote on compensation.
CEO Brady Dougan received 9.79 million francs in 2013, up 26
percent after the bank increased profits and strengthened its
balance sheet against potential loan losses. But it missed its
target for underlying return on equity, which came in at 10
percent compared with a target of 11 percent.
By comparison, UBS chief Sergio Ermotti got a 21 percent pay
increase last year.
Dougan faced criticism from shareholders and the Swiss
public in 2010 when he received about 70 million francs in
shares from a 2004 stock-linked bonus plan, as well as being
awarded 19 million in compensation for 2009.
Credit Suisse said it had increased its total bonus pool for
2013 by 5 percent to 3.6 billion francs, compared with a 14
percent increase in 2012.
Seeking a settlement in the tax dispute, the lender has
already handed over data on its business, employees and
customers to U.S. authorities. But Dougan in testimony to U.S.
senators in February said the bank had uncovered only "scattered
evidence" of improper conduct.
Dougan said its top managers were not aware a small group of
Swiss-based private bankers helped U.S. customers hide income
The bank said on Thursday it would reduce previously
reported fourth-quarter and 2013 results by 468 million francs
after taxes to mainly reflect the U.S. tax deal provision,
resulting in a fourth-quarter net loss of 476 million francs.
It had already in March restated its fourth-quarter results
after a 275 million franc charge to settle lawsuits over
mortgages sold to U.S. institutions Fannie Mae and Freddie Mac.
Credit Suisse said total litigation provisions had doubled
to 2.33 billion francs, compared with 1.16 billion a year
earlier - an increase also reflecting a host of other matters
including mortgage-related litigation.
($1 = 0.8860 Swiss Francs)
(Additional reporting by Albert Schmieder; Editing by David
Goodman and David Holmes)