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Credit Suisse, Deutsche Bank to Pay Billions to Settle Subprime Lending Charges

The settlement concerns irregularities related to subprime lending in 2005 and 2007

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Dec 25, 2016
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Credit Suisse (

CS, Financial) and Deutsche Bank (DB, Financial) have reached an agreement with the U.S. Justice Department according to which the two banks have to pay a financial penalty due to irregularities related to sale of subprime lending in 2005 and 2007.

In order to close the dispute, Credit Suisse has to pay $5.3 billion and Deutsche Bank has to pay $7.2 billion.

In addition, the Swiss bank will have to pay $2.48 billion in financial penalties and it has been held responsible for the damages to consumers.

Credit Suisse must pay $2.8 billion in compensation for these financial damages over a period of five years.

On Dec. 22, Credit Suisse Group AG, the Swiss international financial services holding company that runs the Credit Suisse Bank, closed at $14.85, down 8 cents from the previous trading day, with 2,904,838 shares traded on the NYSE.

The stock is more volatile than the overall market with a beta of 1.34 and lost 31.53% year to date.

Credit Suisse Group was outperformed by the S&P 500 with 42.28%.

The 52-week range is between $10.01 and $22.22. Credit Suisse has a market capitalization of $31.59 billion and a volume of 2.09 billion shares outstanding, of which approximately 93.8% can be traded on the NYSE.

Credit Suisse Group had $378.15 billion in cash on hand and $282.67 billion in total debt, as of the most recent quarter. The book value per share is $20.85.

Among the top institutional holders of Credit Suisse Group, Brandes Investment Partners L.P. and Earnest Partners LLC stand out with 6,558,941 shares and 6,159,963 shares as of Sept. 30.

On Dec. 22, Deutsche Bank closed at $18.63, up 9 cents from the previous trading day, with 8,607,428 shares traded on the NYSE.

The stock lost 22.83% year to date. Deutsche Bank AG was outperformed by the S&P 500 with 33.58%.

The 52-week range is between $11.19 and $26.37. Deutsche Bank has a market capitalization of $26.24 billion and a volume of 1.38 billion shares outstanding, of which approximately 92% can be traded on the NYSE.

Deutsche Bank had $976.71 billion in cash on hand and $824.2 billion in total debt, as of the most recent quarter. The book value per share is $50.88.

Bank of America (

BAC, Financial) and Goldman Sachs (GS, Financial) are among the top institutional stockholders of Deutsche Bank.

Disclosure: I have no positions in any stock mentioned in this article.

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