A lawsuit of more than $1 billion has been filed against Credit Suisse (CS - Free Report) , alleging it to have wrongly written-down assets in its trading segment, dating back to 2015 and 2016. The news was reported by a Swiss newspaper, SonntagsZeitung.
The case has been filed by pension funds of the police and fire departments in Birmingham. The plaintiffs charge the bank of providing false and misleading information about some of the high-risk investments that resulted in a large drop in its share price and led to heavy losses for investors.
However, Credit Suisse has condemned the case as “unfounded and without merit.” It said that it has analyzed these claims in the last three years and addressed all information queries from regulators.
Currently, the lawsuit awaits U.S. District Court for the Southern District of New York’s decision whether to grant it as a class action or not.
In 2015, CEO Tidjane Thiam and his finance chief, David Mathers noted that had been surprised by the large amount of illiquid trades present. Also, they had written them down over a period of two and a half months and reached the $1 billion mark.
On Feb 14, the bank reported full-year 2017 net loss attributable to shareholders of CHF 983 million, which includes CHF 2.7 billion impact related to the re-assessment of deferred assets due to the U.S. tax reform.
Credit Suisse has entered the final leg of its restructuring and remains on track to achieve adjusted operating expenses of below $4.8 billion in 2018. These efforts to improve the bank’s financials encourage us. However, persistent legal hassles continue to hurt its reputation.
Shares of Credit Suisse have gained 15.6% over the past year, outperforming 11.4% rally for the industry it belongs to.
The stock carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks worth considering in the same space are ING Group, N.V. (ING - Free Report) , Royal Bank of Canada (RY - Free Report) and The Toronto Dominion Bank (TD - Free Report) . All these stocks carry a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for ING Group has increased 7.8% for the current year, in the last 30 days. The company’s share price has surged 24.6% in the past year.
Royal Bank of Canada has witnessed 1.7% upward earnings estimate revision for 2018, in the last 30 days. Its share price has risen 5.2% in the past year.
Toronto Dominion’s shares have gained 7.3% in a year and its earnings estimates for 2018 have moved up 1.7% in the last 30 days.
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