A case with its roots in the 2008 financial crisis came to a close on Wednesday as Credit Suisse confirmed it will receive $385 million from Lehman Brothers Holdings. The Swiss bank had initially sought over a billion dollars in compensation for terminated derivatives transactions.
Lehman Brothers became one of the faces of the financial crisis after it filed for bankruptcy in September of 2008. The investment bank’s failure meant that several companies have had to make claims against it regarding terminated derivatives contracts. Aside from Credit Suisse, the firm has already had to settle accounts with JP Morgan and Citibank.
Inflating their losses?
Credit Suisse claimed that it was owed $1.2 billion in compensation for terminated derivatives contracts, but Lehman Brothers argued that this was not the case. The investment bank claimed that Credit Suisse was inflating the value of its losses to take money from its creditors.
NEXT BLOCK SOFIA 2.0 + Fabulous Blockchain After-PartyGo to article >>
Yesterday’s announcement may have illustrated that was indeed the case. As noted, the Swiss bank will receive $385 million, a fraction of the amount it was initially asking for.
More frustratingly for Credit Suisse, the case will mean its strategic resolution unit will take a $70 million hit this year. The firm did not seem overwhelmingly concerned by this as it released a statement saying this loss “will not have a material impact to the bank.”
Credit Suisse will not receive the money awarded to them immediately either. The settlement was reached between the two parties and not via the courts. As such, the Swiss bank will have to wait for the US justice system to approve the agreement before they can receive the cash.