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CREDIT SUISSE

Credit Suisse to pay out $5.28bn settlement to US

US authorities on Wednesday announced a $5.28 billion settlement with the Swiss banking giant Credit Suisse, adding to the list of loose ends being wrapped up as Washington prepares to install a new president.

Credit Suisse to pay out $5.28bn settlement to US
File photo: Fabrice Coffrini
Wednesday's settlement with Credit Suisse confirms the announcement the bank made last month that it had reached an agreement with Washington over its role in the sale of the kind of toxic securities that led to the global financial crisis of 2008.
   
The US Justice Department had announced a similar deal with the German lender Deutsche Bank on Tuesday.
   
Federal prosecutors say Credit Suisse has admitted that between 2005 and 2007 it knowingly deceived investors in the sale of complex securities derived from residential mortgages.
   
The system-wide failure of such securities in 2008 caused a cascading wave of bankruptcies and crises that touched off the Great Recession, which cost tens of millions of jobs around the world.
   
According to the Justice Department, Credit Suisse employees knowingly packaged poor quality loans for sale, referring to them in some instances as “utter, complete garbage” and “complete crap.”
   
“Credit Suisse made false and irresponsible representations about residential mortgage-backed securities, which resulted in the loss of billions of dollars of wealth and took a painful toll on the lives of ordinary Americans,” US Attorney General Loretta Lynch said in a statement.
   
The settlement requires Credit Suisse to pay a $2.5 billion penalty and provide $2.8 billion in loan forgiveness and affordable financing to affected communities, distressed borrowers and homeowners who now owe more than their homes are worth.
   
As the hour of President-elect Donald Trump's inauguration approaches on Friday, the administration of President Barack Obama has hurriedly cleared a backlog of corporate and other settlements.
   
Automaker General Motors on Wednesday also agreed to pay a $1 million penalty for accounting control failures in a case brought by the Securities and Exchange Commission.
   
The Texas medical device maker Orthofix International also settled with the SEC for $14 million over bribery in Brazil.
   
And late on Tuesday, the Justice Department, Environmental Protection Agency and Navajo Nation announced a settlement for the cleanup of 94 abandoned uranium mines on Navajo Nation territory.

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MONEY

Reader question: Can a foreign national obtain a loan in Switzerland and under what conditions?

When it comes to borrowing money from a Swiss bank, nationality may play a role in some cases, but not in others. This is what you should know about this process.

Reader question: Can a foreign national obtain a loan in Switzerland and under what conditions?
Getting a losn in Switzerland is subject to many conditions. Photo by Claudio Schwarz/Unsplash

Like almost everything in Switzerland, consumer loans are regulated by legislation, in this case the Consumer Credit Act.

It defines a loan as between 550 and 80,000 francs, “offered by commercial providers of financial services”. Lower or higher amounts are not subject to the Consumer Credit Act.

As is the case in many other countries, Swiss banks have strict criteria about who they lend money to. After all, no financial institution wants to deal with people who are not creditworthy.

Whether or not a foreign national can borrow money from a bank depends on their permanent place of residence and permit status.

As a rule, Swiss lenders don’t give loans to non-residents. So if you reside abroad, there is practically no chance that a bank in Switzerland will lend you money.

However, some financial institutions make exceptions for cross-border workers. If you fall under this category, you can use this interactive tool, select “ Permit G” under “Residence Permit” and see what, if any, options, there are.

READ MORE: EXPLAINED: What cross-border workers should know about taxation in Switzerland

If you are a foreign national but have a permanent residence status (Permit C), your chances of getting a loan are practically the same as those of Swiss citizens — provided, of course, that you meet all the requirements set by lenders (see below).

What about other permit holders?

If you have a B Permit, you might be approved for a loan, depending on how long you have had this permit — obviously, the longer the better.

However, “you may be offered a higher interest rate or a limited loan amount. This is because of the statistically higher probability that you will return to your home country. Some lenders require the loan to be repaid by the time the B permit expires”, according to consumer comparison site comparis.ch 

Holders of other, temporary or conditional permits are not accepted.

READ MORE: ‘A feeling of belonging’: What it’s like to become Swiss

What conditions — other than residence permit — should you fill to be considered for a loan?

You must be at least 18 years of age, though additional restrictions may apply to applicants under 25 — for instance, a higher interest rate or a limited loan amount. That’s because “lenders are generally more cautious with young applicants as their financial circumstances are usually less settled and the risk of default is deemed to be higher,” Comparis noted.

The same cautious approach applies to pensioners, especially those who have no regular income. The social security payments (AHV/AVS) do not count as income for the purpose of the loan.

There is also other eligibility criteria, based on employment status and salary. People with a regular income have a higher chance of obtaining a loan than those who are self-employed, temporarily employed, work on hourly basis or, logically, unemployed.

Other factors, including your existing debts, are also taken into account in the decision process.

Basically, lenders favour applicants with a stable income and good financial standing, in much the same way as supplemental health insurance carriers prefer young and healthy people.

Keep in mind that if your loan application is rejected, this will be recorded in the database of the  Central Office for Credit Information, making it more difficult, though not impossible, to get a loan in the future.

The same rules do not apply to American citizens

That’s because Swiss and European banks are subjected to US demands to disclose the assets of Americans overseas in order to prevent tax evasion.

As adherence to these requirements is a major headache for the banks and in some cases also violates their country’s privacy laws, financial institutions prefer not to deal with Americans at all, even those who are permanent residents.

If you are a US citizen who also has Swiss nationality, you may have an easier time of it, but could still face hurdles in obtaining loans and other banking services.

There is no immediate relief in sight, although many organisations representing Americans abroad are lobbying in Washington to change the existing legislation.

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