Credit Suisse (CS), Department of Justice Close in on $1.6 Billion Settlement: Report

NEW YORK (TheStreet) -- Credit Suisse (CS) and the Department of Justice are reportedly closing in on deal as high as $1.6 billion to settle criminal charges of tax evasion. 

The charge follows an investigation into how the Swiss bank assisted individuals avoid U.S. taxes.

According to a Reuters report, people close to the matter said the discussions are still ongoing and details are yet to be finalized.

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U.S. authorities are also weighing up what effect a sizable penalty would have on Credit Suisse's ability to operate, reports The Wall Street Journal. This comes after the bank paid close to $200 million in February in relation to an SEC case accusing Credit Suisse of providing brokerage and advisory services to U.S. clients without proper registration.

Attorney General Eric Holder has reaffirmed his commitment to justice, though. In a video posted to the Department of Justice's website Monday, Holder said, "No individual or entity that does harm to our economy is ever above the law... There is no such thing as 'too big to jail'."

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TheStreet Ratings team rates CREDIT SUISSE GROUP as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:

"We rate CREDIT SUISSE GROUP (CS) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its expanding profit margins, increase in stock price during the past year and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • CREDIT SUISSE GROUP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CREDIT SUISSE GROUP increased its bottom line by earning $1.30 versus $0.89 in the prior year. This year, the market expects an improvement in earnings ($3.53 versus $1.30).
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 7.9%. Since the same quarter one year prior, revenues slightly dropped by 3.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • 42.22% is the gross profit margin for CREDIT SUISSE GROUP which we consider to be strong. Regardless of CS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CS's net profit margin of -4.94% significantly underperformed when compared to the industry average.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Capital Markets industry. The net income has significantly decreased by 253.0% when compared to the same quarter one year ago, falling from $318.19 million to -$486.90 million.
  • Net operating cash flow has significantly decreased to -$3,698.89 million or 118.25% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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