Credit Suisse Investors Shrug Off Tax Plea

Updated, 7:12 p.m. | A day after Credit Suisse pleaded guilty to tax evasion in the United States, the Swiss bank says that it is able to conduct its business as normal despite its criminal conviction. Swiss officials and investors seemed to welcome the fact that the resolution allows the bank to put the matter behind it.

Credit Suisse on Monday pleaded guilty to one count of conspiring to aid tax evasion in a scheme that spanned decades. The bank will pay about $2.6 billion in penalties and hire an independent monitor for up to two years. While the governments involved haggled over the release of client names for years, Credit Suisse ultimately was not forced to so as part of the plea.

In contrast, UBS agreed in 2009 to pay $780 million and turned over the names of 4,450 American account holders after the Swiss government passed measures that allowed the bank to effectively bypass Swiss secrecy laws. As part of the settlement, UBS avoided criminal prosecution in the investigation.

Brady W. Dougan, Credit Suisse’s chief executive, disputed reports that the bank had dragged out the discussions with American officials in an effort not to release the names of clients.

“We did everything we could to bring this to a resolution,” he said. It was complicated by “government to government” conversations, he said, and Swiss law that prohibits the release of client data.

Mr. Dougan said there were two major differences with the UBS settlement. The Swiss government allowed UBS to provide names; it did not do so with Credit Suisse. And five years later, fines that Credit Suisse is paying are significantly higher. “Everyone is obviously very aware of the inflation of costs in settlement issues,” he said.

Since the start of the negotiations, the American government had hoped to obtain the client names so that it could pursue individuals over tax evasion. In February, Mr. Dougan testified before the Senate that he had asked the government to make it possible to provide the names.

In early May, Gregory B. Craig, a partner at the law firm Skadden, Arps, Slate, Meagher & Flom who was previously White House counsel under President Obama, phoned officials at the Department of Justice to say that Credit Suisse was hoping to persuade the Swiss government to cooperate.

Around that time, Switzerland’s finance minister, Eveline Widmer-Schlumpf, met with the United States attorney general, Eric H. Holder Jr., to discuss the investigation, said people with knowledge of the matter. She said the government would not use emergency powers.

In recent weeks, the board at Credit Suisse debated the pros and cons of pushing for such powers, which would allow the bank to produce the names, said one person briefed on the matter. But doing so could possibly make the bank beholden to the government.

“The government was not prepared to offer emergency powers and the bank did not want it,” this person said.

Swiss officials, however, said that the bank did not recently press the issue.

“They did not ask us to introduce emergency law,” said Mario Tuor, a spokesman in the Swiss finance ministry.

Credit Suisse investors shrugged off the impact of the guilty plea. Shares in the bank, Switzerland’s second-largest after UBS, closed up nearly 1 percent in trading in Switzerland and in New York.

On Tuesday, the Credit Suisse top management spread out around the world to calm employees and clients after its felony conviction. Mr. Dougan was in New York while Urs Rohner, the chairman, was in Switzerland and David Mathers, the company’s chief financial officer, was in London.

In call with media and analysts, Mr. Dougan again said the bank took full responsibility for its actions, but emphasized that it had seen little business impact as a result of the plea.

“We have found no instances where clients cannot do business with us,” he said. “Our discussions with clients have been very reassuring and we haven’t seen very many issues at all.”

Mr. Dougan also said that he never considered resigning over the incident, even as opposition politicians continue to call for his ouster. Mr. Rohner told a television station in Switzerland that he and Mr. Dougan had clean hands (though in German the literal translation is a white vest). He conceded that in the past, Swiss banks, including Credit Suisse, did accept untaxed funds. “We are disappointed and regret this,” Mr. Rohner said.

Swiss government officials said that they were relieved that the matter was resolved and that Credit Suisse could continue operations. Switzerland’s main markets regulator also issued a statement saying that its investigation was over, and no further measures against the bank were expected.

Credit Suisse also said on Tuesday that the settlement would reduce second-quarter net income by 1.6 billion Swiss francs ($1.8 billion). Mr. Dougan said Tuesday that the bank would pare its assets to try to restore its capital levels after the fine.

Credit Suisse will reduce so-called risk-weighted assets by $14 billion, to $266 billion, and sell noncore assets, including real estate, to try to restore common equity Tier 1 capital ratio — a measure of its ability to absorb losses — to 10 percent by the end of 2014. The capital level would have been at 9.3 percent in the first quarter of 2014 had the charges from the settlement been applied. Some analysts expressed doubt about the bank’s thin capitalization levels.

After it restores its 10 percent level, the bank said it would return half of its earnings to shareholders. Its long-term goal for common equity Tier 1 capital ratio is 11 percent.