Credit Suisse faces another costly court ruling.

A court in Bermuda will soon publish a negative decision against a local insurance subsidiary of the major Swiss bank, as Credit Suisse announced on Thursday night.

The court could order the bank to pay potentially more than $500 million, the institute warned.

Credit Suisse has made provisions on this matter in the past and intends to pursue all available legal action.

However, the bank is examining whether further provisions should be made as part of the quarterly results.

The background to the case are allegations that a former client advisor in Switzerland exceeded his investment powers in asset management, which led to excessive concentrations in the portfolios and subsequent investment losses.

In 2018, the client advisor was sentenced by a Geneva court to five years in prison and to pay around $130 million in damages for fraud, counterfeiting and criminal mismanagement.

Civil lawsuits based on the findings of the criminal proceedings against the former customer advisor were heard before the court in Bermuda.

Claims in the billions settled

At the end of 2021, litigation provisions at Credit Suisse totaled CHF 1.54 billion.

In recent years, the institute has been involved in a number of legal cases and has paid billions to settle them.

"Since at least parts of the payment in question have already been deferred, the financial damage in the first quarter is probably manageable," explained ZKB analyst Michael Kunz.

"More important in our opinion is that this type of news flow is not exactly conducive to the bank's external perception and is only likely to be conducive to a limited degree of calm in the operative business." With a minus of 1.1 percent, Credit Suisse was the biggest loser in early trading the Swiss standard values.