UBS Agrees to Settle Credit Suisse's Residential Mortgage-Backed Securities Responsibilities for $300 Million
In a recent press release, UBS, the global financial services company, announced impressive financial results for the second quarter of 2025. The Swiss banking giant reported a profit before tax of $2.19 billion, marking a 49% increase from the previous year. This notable growth was aided by a net release of provisions and contingent liabilities of $427 million, related to a legacy matter concerning UBS's subsidiary, Credit Suisse.
The profit also includes a net deferred tax benefit of $577 million. Moreover, the net profit for shareholders was reported at $2.39 billion, more than doubling from the prior year.
The second quarter's impressive figures come amidst UBS's ongoing resolution of several legacy legal matters with the U.S. Department of Justice (DoJ). These matters mainly involve settlements related to residential mortgage-backed securities (RMBS) and tax evasion issues stemming from UBS's acquisition of Credit Suisse and its own past conduct.
In August 2023, UBS agreed to pay $1.435 billion to settle its own RMBS fraud case involving securities issued in 2006 and 2007. This settlement was part of a broader $36 billion civil penalty effort against 18 banks for RMBS-related fraud from the 2007-2008 financial crisis.
In August 2025, UBS paid $300 million to the DoJ to resolve outstanding consumer relief obligations inherited from a 2017 Credit Suisse RMBS settlement. Credit Suisse had originally settled for $5.28 billion over mis-selling mortgage securities from 2005-2007, including a $2.48 billion civil penalty and $2.8 billion in relief measures like loan modifications and debt forgiveness.
Another significant settlement was reached in May 2025, when UBS agreed to pay $511 million to conclude a DoJ tax probe related to Credit Suisse's involvement in preparing false income tax returns and evading U.S. taxes through offshore accounts. Credit Suisse pleaded guilty to conspiring to hide more than $4 billion from the IRS.
UBS also filed a $200 million lawsuit in 2024 against Bank of America to recover legal costs related to subprime mortgages issued before the 2008 financial crisis, connected to UBS's packaging of these mortgages originally from Countrywide Financial.
The total estimated contingent liabilities related to Credit Suisse legacy matters, including other issues like the Archegos Capital fallout, may reach around $1.5 billion, with some payments already realized. UBS aims to address all outstanding Consumer Relief Obligations issues related to Credit Suisse.
For the third quarter of 2025, UBS expects to report a credit in its Non-core and Legacy division due to the release of a contingent liability. The company continues to work diligently to resolve its legacy matters and move forward with its strategic plans.
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