Potential Enron Fallout Hits Credit Suisse Profit
Credit Suisse Group said Wednesday that its second-quarter net income fell 37% because the financial services company set aside more money to cover possible charges for litigation related to the collapse of Enron Corp. and other legal proceedings.
The provision of 624 million Swiss francs ($489 million) for legal charges brings the total set aside for litigation to 1.4 billion francs ($1.1 billion), which the bank called “adequate.”
Credit Suisse’s move came a day after Enron investors got their biggest settlement yet, as the Canadian Imperial Bank of Commerce agreed to pay $2.4 billion. The coalition of Enron investors, led by the University of California, had previously won settlements of $2 billion from Citigroup Inc. and $2.2 billion from JPMorgan Chase & Co.
Merrill Lynch & Co. and Credit Suisse First Boston, the Swiss company’s U.S.-based investment banking unit, are among the remaining defendants in class-action suits against Wall Street firms accused of helping Enron hide losses in a massive accounting fraud.
Credit Suisse is believed to have underwritten Enron securities and recommended Enron stock to investors.
Credit Suisse spokesman Marc Dosch declined to comment on the bank’s business relationship with Enron.