Credit Suisse is set to appear at the High Court in London on Thursday to defend itself against a $160m (£129m) claim over allegations the Swiss bank made “fraudulent misrepresentations” related to the sale of residential mortgage-backed securities.
The claim, brought by Loreley Financing, a subsidiary of German bank IKB, argues it was misled by Credit Suisse when it made a $100m investment back in 2007, which eventually collapsed in value.
The trial is set to last 8 weeks, and is expected to hear evidence from several former Credit Suisse staff involved at the time.
The sale of residential mortgage-backed securities by Credit Suisse and other banks is regarded as one of the main causes of the 2008 global financial crisis, resulting in billions in losses for investors and a global economic slump.
Credit Suisse was forced to pay $5.28bn to the US Department of Justice (DOJ) in 2017 to settle its investigation into the bank.
“Credit Suisse claimed its mortgage backed securities were sound, but in the settlement announced today the bank concedes that it knew it was peddling investments containing loans that were likely to fail,” the DOJ said at the time.
Loreley said in a statement that the bank “now seeks to distance itself from the DoJ’s comments,” accusing the Zurich lender of claiming the settlement “does not evidence any misconduct on the part of the bank at all.”
Credit Suisse has paid out hundreds of millions of dollars to settle similar claims since then.
Credit Suisse declined to comment on the case.
The case represents one of many legacy cases and regulatory investigations that UBS will be forced to shoulder after it bought the beleaguered bank for $3.25bn last month – an issue which angered some shareholders at its annual general meeting last month.