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Swiss banking giant UBS’s $300M settlement with the U.S. Department of Justice has closed one of the final chapters in Credit Suisse’s mortgage-backed securities saga, a lingering legacy from the financial crisis era. The agreement, announced Monday, eliminates obligations Credit Suisse had carried since a 2017 DOJ settlement tied to misleading investors about the quality of residential mortgage loans bundled into securities.

Mortgage Meltdown Legacy Comes to a Close

Between 2005 and 2007, Credit Suisse packaged hundreds of thousands of risky home loans into securities worth tens of billions of dollars. According to the DOJ, the bank misrepresented the loans’ quality, leaving investors holding toxic assets when the housing bubble burst.

In 2017, Credit Suisse struck a multibillion-dollar deal requiring it to pay a $2.48 billion civil penalty and provide $2.8 billion in consumer relief through mortgage assistance and affordable housing initiatives.

When UBS acquired Credit Suisse in July 2023, it also inherited those burdens. Monday’s deal formally wipes away the remaining consumer relief obligations, freeing UBS from the final weight of the settlement.

UBS: “Resolving Legacy Issues at Pace”

“With this agreement, 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 and in the best interest of all its stakeholders,” the bank said in a statement.

UBS said it expects to record a credit in its ‘non-core and legacy’ division in its next earnings report, set for Oct. 29, reflecting the resolution of the obligation.

A Pattern of Costly Settlements

This is not UBS’s first multimillion-dollar reckoning.

• In May 2024, it agreed to pay $510 million to settle a DOJ probe into how Credit Suisse allegedly aided tax evasion.

• In 2023, UBS itself paid $1.44 billion to end claims it misled investors in its own mortgage-backed securities offerings from 2006 and 2007.

Together, the settlements illustrate how both UBS and its once-bitter rival Credit Suisse continue to pay dearly for past misconduct long after the financial crisis.