UBS paid $300 million to settle mortgage-related obligations inherited from Credit Suisse, marking another step in the Swiss bank's efforts to clean up legal issues from its emergency takeover of its former rival.

UBS Settles Credit Suisse Mortgage Case for $300 Million

The payment resolves all outstanding consumer relief obligations that Credit Suisse owed under a 2017 settlement with the U.S. Department of Justice. That original deal required Credit Suisse to pay $5.7 billion over claims it misled investors about residential mortgage-backed securities sold before the 2008 financial crisis.

UBS has been steadily working through a pile of legal headaches since acquiring Credit Suisse in March 2023. The bank already paid $511 million in May to settle a separate U.S. investigation into how Credit Suisse helped wealthy Americans evade taxes.

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More settlements likely ahead

Monday's payment won't be the last. UBS still faces potential costs from other Credit Suisse legal matters, including fallout from the Archegos Capital Management collapse in 2021. Bloomberg Intelligence estimates those remaining cases could cost around $500 million.

The mortgage securities at the center of Monday's settlement were toxic investments that lost massive value during the financial crisis. Banks faced accusations they misrepresented the quality of underlying home loans to attract buyers, making the subprime mortgage meltdown worse.

UBS knows this territory well. The bank paid $1.44 billion in 2023 to settle its own mortgage-backed securities case with U.S. authorities, one of its biggest legal problems at the time.

Financial impact

UBS said the settlement will actually boost its third-quarter results because the bank can now release money it had set aside for potential losses. The payment comes from UBS's non-core unit, which houses legacy Credit Suisse assets.

“UBS has resolved another of Credit Suisse's legacy issues, in line with its intention to resolve legacy matters at pace in a fair and balanced way,” the bank said in a statement.

The cleanup continues as UBS tries to move past the messy acquisition that saved Credit Suisse from collapse but left the Swiss bank with a mountain of inherited problems.

UBS is also facing its own challenges; though, in fairness, which major investment bank isn’t? As FinanceMagnates.com reported in May, the institution is in discussions with clients who suffered significant losses on complex foreign exchange derivatives, following market volatility sparked by President Donald Trump’s tariff announcements, according to people familiar with the matter.