Credit Suisse shares drop on US tax probe over accounts

Credit Suisse slumped after a report that US authorities are investigating whether the bank helped clients hide assets.

Shares dropped as much as 5% in Zurich. The prospect of fresh legal risks for the bank has added to nervousness around the critical strategic revamp due to be announced later this month.

The US Justice Department is probing whether the Swiss bank aided US account holders, particularly with South American passports, who may not have told the internal revenue service about assets worth hundreds of millions of dollars.

Credit Suisse shares whipsawed last week after speculation over its financial health. That was accompanied by a spike in the cost to insure the bank’s debt against default, which jumped to its highest ever before recovering. Credit Suisse’s shares are now down 52% year to date.

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The bank is due to unveil a strategic review on October 27th, which is expected to include a large-scale investment-banking retreat, spinning off large parts and hiving off its securitised products group.

Credit Suisse is considering bringing in an outside investor to take a partial stake and inject money into a spin-off of its advisory and investment bank businesses, people familiar with the matter have said.

The bank has also said it is working on possible asset and business sales as part of the restructuring. Other potential disposals include the sale of its Latin American wealth management operations, excluding Brazil. — Bloomberg