UBS Agrees to $300 Million Settlement in US Mortgage Securities Cases
UBS will pay $300 million to settle a long‑standing U.S. case, bringing closure to disputes tied to past mortgage‑backed securities dealings. The case is linked to mortgage‑backed securities sold before the 2008 financial crisis. This deal wraps up obligations inherited from Credit Suisse, which UBS bought in a government‑brokered rescue in 2023. For years, these cases have been a shadow on the banking industry, costing major lenders billions in penalties and relief programs.
We often hear about bank bailouts and settlements, but this one matters for a simple reason: it signals a turning point for UBS as it works to settle old risks and focus on growth. We’ll study what led to the settlement, how it affects UBS financially, and why it matters for investors and the banking sector today.
Background: Credit Suisse 2017 RMBS Settlement
In 2017, Credit Suisse agreed to pay around $5.7 billion to U.S. authorities over claims it misled investors about the risk and quality of RMBS sold before the 2008 crash. This total included a $2.5 billion civil penalty and $2.8 billion in consumer relief payments.
By mid‑2025, much of the consumer relief remained unpaid. UBS took on these pending obligations after completing its acquisition of Credit Suisse.
UBS’s Takeover of Credit Suisse and Inherited Legal Liabilities
UBS acquired Credit Suisse for about $3.2 billion in a government‑brokered rescue in March 2023. As a result, UBS took on many legacy legal problems, from RMBS issues to tax‑evasion cases.
In 2023, UBS itself paid $1.44 billion to resolve its own RMBS case. In May 2025, it also settled a U.S. Aax evasion investigation linked to Credit Suisse, resulting in a $511 million settlement.
Details of the New $300 Million Settlement
On August 1, 2025, Credit Suisse Securities (USA) LLC reached an agreement with U.S. authorities. Department of Justice. UBS will deliver $300 million to satisfy the remaining consumer relief obligations under the 2017 settlement.
UBS said the settlement completely resolves the legacy RMBS issue, aligning with its goal to address inherited legal matters quickly and responsibly.
Financial Impact and Accounting Treatment
UBS plans to recognize a credit in its Q3 2025 financials within its Non‑Core & Legacy segment. That credit reflects the release of contingent liability previously reserved during the Credit Suisse acquisition.
Although the bank will book the $300 million payment as an expense, the offsetting liability release is expected to boost its near‑term earnings.
Strategic and Reputational Significance
We at UBS see this deal as a key step in cleaning up legacy liabilities and shifting focus back to core areas like wealth management and investment banking.
Recent moves also include $700 million in cost cuts in Q2 2025, part of a broader $13 billion cost‑reduction plan UBS is executing. So far, $9.1 billion has been saved.
Despite the cleanup, the bank still faces other inherited risks, such as fallout from Archegos Capital Management, which may cost around $500 million.
Comparison to Industry Precedents
Banks in total paid more than $36 billion in civil penalties over RMBS-related claims tied to the financial crisis. UBS’s original RMBS settlement in 2023 for $1.44 billion, and this new $300 million deal settles into that broader legacy narrative.
Credit Suisse’s 2017 settlement was notably larger than UBS’s own, highlighting the scale of inherited issues. The new payment indicates UBS is wrapping up the final RMBS consumer relief issue from Credit Suisse’s past.
Conclusion
With this $300 million payment, UBS fully resolves the last consumer relief obligation Credit Suisse had tied to the 2017 RMBS case. The bank expects positive near‑term accounting impacts from releasing liabilities no longer needed.
This is a clear sign of UBS’s strategy to tackle legacy issues decisively. It moves the bank closer to focusing on growth, stability, and core businesses. But questions remain, such as how many other inherited burdens remain and how regulators and investors view the progress ahead.
FAQS:
UBS faced scandals for helping wealthy clients hide money to avoid taxes and for mis‑selling risky mortgage bonds before 2008. These actions led to large fines worldwide.
UBS deals with old legal cases from Credit Suisse, including mortgage‑bond mis‑selling and tax evasion claims. It also faces lawsuits linked to failed funds like Archegos Capital.
Yes. UBS recently agreed to pay $300 million to settle the last part of Credit Suisse’s 2017 mortgage‑bond case, fully closing those consumer relief obligations in the U.S.
Disclaimer:
This content is for informational purposes only and not financial advice. Always conduct your research.