ZURICH/FRANKFURT: Credit Suisse and Deutsche Bank have been hit with a combined penalty of more than $12 billion over the sale of US toxic debt, further hampering two of Europe’s leading investment banks as they struggle with weak earnings.
The penalties stem from an initiative launched by US President Barack Obama to pursue banks for selling sub-prime debt without warning of the risks, a practice that led to the worst economic crisis since the Great Depression.
Credit Suisse agreed to pay more than $5.2 billion in a deal with US authorities and the penalty is likely to push it to a second consecutive annual loss. The payment, to settle claims it misled investors when selling mortgage-backed securities in the run-up to the 2008 financial crisis, is split into two parts.
It will first pay $2.48 billion and later provide $2.8 billion over five years to offset the impact on consumers, the bank said.
That news came after Deutsche Bank agreed to a total $7.2 billion settlement for its pooling and sale of toxic mortgage securities, the settlement also divided in a similar manner. The German bank had previously said that the Department of Justice was seeking twice that figure.
“I think the fines are reasonable and represent a positive for the system,” said Alberto Gallo, head of global macro strategies at hedge fund Algebris Investments.
The penalties put the two European banks at a further disadvantage to larger US rivals, many of whom have already absorbed their own fines for such wrongdoing and have strong capital cushions. US banks earlier paid $46 billion in such penalties.
Deutsche shares rise
Investors, who had feared an even bigger penalty for Deutsche, were relieved and its shares gained more than 2 percent. They have risen more than 80 percent since hitting a record low at the end of September on fears the bank would need to raise cash from investors.
“It is no great coup but the settlement reduces the uncertainty,” said Ingo Speich, of Union Investment, a Deutsche bank shareholder, adding that he now did not expect the bank to sell more shares to bolster its capital.
Credit Suisse, who people familiar with the matter earlier told Reuters had fought to soften its settlement, saw its shares slip by more than 1 percent.
The final deal is in line with the $5 billion-$7 billion the US Department of Justice (DOJ) had asked Credit Suisse to pay earlier in negotiations, as reported by Reuters on Monday.
Credit Suisse said it would take a pre-tax charge of approximately $2 billion in addition to its existing reserves against these matters in the final three months of 2016.
Analysts at regional bank ZKB said that the charge would depress the bank’s leverage ratio from 3.4 percent to 3.1 percent.
The US authorities, meanwhile, sued Barclays on Thursday over similar claims.
Barclays said on Friday that it rejected the complaint, would “vigorously defend” the case and sought its dismissal “at the earliest opportunity.”
US hits European investment banks with toxic debt penalties
US hits European investment banks with toxic debt penalties
Manufacturing and trade drive 5% rise in Saudi operating revenue
RIYADH: Saudi Arabia’s Operating Revenue Index rose 5 percent year on year in November, supported by growth in manufacturing, trade and construction, official data showed.
In its latest report, the General Authority for Statistics noted that the rise was “supported by an increase in manufacturing activities by 6.5 percent,” while wholesale and retail trade, including the repair of motor vehicles, increased by 9.5 percent.
Construction activity expanded 7.4 percent, while financial activities grew 14.4 percent and insurance activities rose 8.6 percent.
The data underline the Kingdom’s broader economic diversification drive under Vision 2030, with non-oil activities such as manufacturing, construction, finance and trade continuing to expand and contribute a larger share to overall economic activity.
On a monthly basis, the index fell 1.2 percent from October, according to the preliminary figures released by GASTAT, pointing to uneven momentum across sectors at the end of the year.
The fall was attributed to weaker performance in some sectors, including a 3.8 percent decrease in mining and quarrying activities and a 25.8 percent drop in electricity, gas, steam and air conditioning supply activities.
In the labor market, the Employees Compensation Index recorded strong annual growth, rising 13.6 percent compared to November 2024. The increase was supported by an 18.8 percent rise in manufacturing activities and a 10.5 percent increase in wholesale and retail trade activities.
On a monthly basis, employee compensation edged up 0.1 percent, reflecting modest gains across several sectors.
Indicators linked to construction activity also strengthened. The number of issued building permits increased 28.4 percent year on year in November 2025, reaching 8,034, compared to 6,258 in the same month a year earlier.
The surge in building permits indicates robust investment in physical infrastructure, a key pillar of Saudi Vision 2030, while rising wages support its aim of improving citizen prosperity.
The report stated this was “a result of the increase in the number of issued building permits during November.” Furthermore, permits showed strong momentum from the previous month, increasing by 7.7 percent compared to October 2025.
