ZURICH – Credit Suisse has reached an 11th-hour out-of-court settlement with Mozambique over the decade-old $1.5 billion-plus “tuna bond” scandal, the Swiss bank’s new owner UBS (UBSG.S) said on Sunday, drawing a line under a damaging dispute it inherited.
“The parties have mutually released each other from any liabilities and claims relating to the transactions,” UBS said in a statement. “The parties are pleased to have resolved this long-running dispute,” it added without giving further details.
Under the deal, struck one day before a three-month London civil trial was due to start, UBS will forgive part of a loan that Credit Suisse made to Mozambique in 2013, representing less than $100 million, said one source familiar with the situation, who declined to be named because the terms are not public.
The deal also included most of the creditors involved in funding a 2013 loan to ProIndicus, a state-owned Mozambican company, UBS said.
The Mozambican Attorney General’s Office and Ministry of Economy and Finance said they were calling a joint news conference for Monday morning in Maputo.
The tuna bond case dates back to three deals between state-owned Mozambican companies and shipbuilder Privinvest – funded in part by loans and bonds from Credit Suisse and backed by undisclosed Mozambican government guarantees.
Mozambique, one of the world’s poorest countries, wanted to revoke a sovereign guarantee on a loan it alleges was corruptly procured and secure compensation for other alleged wrongdoing.
UBS, which rescued scandal-scarred Credit Suisse amid turmoil in the global banking sector earlier this year, has a financial buffer of as much as $10 billion for litigation, JPMorgan analysts estimated in a note to clients on Wednesday.
The banking giant has pledged to resolve Credit Suisse’s legacy legal disputes. Since completing the mega merger on June 12, it has paid $388 million to U.S. and British regulators over dealings with collapsed private investment firm Archegos Capital Management and settled a dispute with a finance blog.
The settlement leaves French shipping mogul Iskandar Safa and his Privinvest group the key remaining defendants in a High Court battle over the funding and shipping deals that pitched Mozambique into economic crisis and triggered U.S. and Mozambican criminal proceedings.
Privinvest did not immediately respond to a request for comment.