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
Islamic finance in Oman poised for 25% growth: Fitch
RIYADH: Oman’s Islamic finance sector is on track to reach $45 billion this year, rising from $36 billion at the end of 2025, supported by a favorable macroeconomic environment, according to a report by Fitch Ratings.
The rating agency said the anticipated 25 percent year-on-year growth will be underpinned by increasing demand for sukuk as both a funding mechanism and a public policy tool, alongside government-led initiatives and growing grassroots demand for Shariah-compliant financial products.
Sukuk accounted for around 60 percent of US dollar-denominated debt issuance in 2025, a sharp decline from 94.3 percent previously, with the remaining share comprising conventional bonds. Despite this progress, Fitch highlighted ongoing structural challenges, including the absence of Islamic treasury bills and derivatives, an underdeveloped Omani rial sukuk and bond market, and the limited role of Islamic non-bank financial institutions.
The performance of Oman’s banking sector continues to reflect steady advancement toward Vision 2040, the country’s long-term development strategy focused on economic diversification, private sector expansion, and enhanced financial resilience.
Operating conditions remain supportive for both Islamic and conventional banks in Oman, buoyed by elevated, though gradually moderating, oil prices, the report noted.
Expanding credit flows — particularly to non-financial corporates and households — are helping drive the growth of small and medium-sized enterprises and boost domestic investment. These trends are reinforcing Oman’s efforts to reduce dependence on hydrocarbons and build a more diversified economic base.
Fitch projects loan growth of 6 to 7 percent in 2026, fueled by rising demand across both retail and corporate segments. In addition, the proposed 5 percent personal income tax, scheduled for implementation from 2028, is expected to have only a limited overall impact on banks, according to the agency.
Islamic banking in Oman was introduced following the Central Bank of Oman’s preliminary licensing guidelines issued in May 2011, which allowed the establishment of full-fledged Islamic banks and Islamic banking windows operating alongside conventional institutions.
This regulatory framework was formally entrenched in December 2012 through a royal decree amending the Banking Law, requiring the creation of Shariah supervisory boards and granting the central bank authority to establish a High Shariah Supervisory Authority.
