Prosecutors have also been pushing for Credit Suisse to plead guilty
in connection with the probe, two people with knowledge of the talks
A spokesman for Credit Suisse declined comment.
The penalty would exceed the 895 million Swiss francs ($1 billion)
that Credit Suisse has set aside to pay potential penalties to the
It's also much tougher than the settlement the Justice Department
reached in 2009 with Credit Suisse's hometown rival UBS AG, which
was also accused of helping Americans dodge taxes.
In that settlement, UBS paid $780 million to settle similar charges,
roughly half the amount being discussed for Credit Suisse, even
though the latter's offshore private banking business was much
smaller than UBS's.
Also, UBS was allowed to enter a deferred prosecution agreement and
criminal charges were later dropped against the firm.
Shares in Credit Suisse fell nearly 1 percent by 6:00 am (1000 GMT),
lagging European banks as a whole, which were down 0.2 percent.
"The shares should have priced in the penalty of $1.6 billion and
will likely bounce back when the final figure is on the table," a
"It's a hefty sum, but is not likely to knock Credit Suisse out.
Worst-case scenario is the bank will simply report no profit, or
just a small profit."
It was unclear what sort of impact a criminal plea could have on
Credit Suisse. Historically, the Justice Department has rarely
pursued criminal prosecutions against financial firms, especially
global companies that could become destabilized following an
Much of the concern stems from the 2002 indictment and eventual
demise of accounting firm Arthur Andersen, which led to the loss of
about 25,000 jobs and greater consolidation in the industry.
But the Justice Department has recently taken a harder stance, in
the wake of criticism about its record.
The Department on Monday posted a video in which Attorney General
Eric Holder said close cooperation with regulators was paving the
way for criminal actions against financial institutions, though he
did not name them.
"I intend to reaffirm the principle that no individual or entity
that does harm to our economy is ever above the law," Holder said.
"There is no such thing as 'too big to jail.'"
[to top of second column]
The Justice Department came under particularly intense fire from the
Senate Permanent Subcommittee on Investigations, which in February
accused the agency of not aggressively pursuing Swiss banks that
helped Americans dodge taxes, including Credit Suisse.
U.S. lawmakers and influential U.S. District Judge Jed Rakoff of
Manhattan have more broadly accused the Justice Department of shying
away from high-level financial prosecutions.
Credit Suisse in February agreed to pay $196 million to resolve a
related case from the U.S. Securities and Exchange Commission (SEC),
which accused the bank of providing services to U.S. clients without
registering with the SEC.
In a sign of the delicate nature of the Justice Department
negotiations, Switzerland's finance minister met with Holder in
Washington on Friday to discuss the investigation of Swiss banks.
A Swiss ministry spokesman said the minister, Eveline
Widmer-Schlumpf, was seeking "fair and equal treatment" of the Swiss
banks involved in the probe.
That discussion followed a meeting U.S. Justice Department officials
held with U.S. regulators last month to make sure a criminal plea
would not cripple the bank's ability to do business in the United
States, a person familiar with the matter said.
A Swiss government source said on Monday the most likely result from
the recent negotiations is a guilty plea from Credit Suisse. "My
impression is that it will go quickly and it could be in the coming
weeks," the source said.
The source added that the Justice Department is being careful to
minimize any unintended ripple effects of a guilty plea. "The DoJ
has no intention of destabilizing Credit Suisse," the source said.
($1 = 0.8778 Swiss Francs)
(Additional reporting by Josh Franklin and Ruppert Pretterklieber in
Zurich; Editing by Cynthia Osterman and David Holmes)
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