In this business the move is known as a “relief rally”. To the uninitiated, it might seem a bit rum for the share price of Switzerland’s second-largest bank to rise after announcing it had pleaded guilty to aiding US tax evaders and agreeing to pay a cool $2.815 billion to settle matters.

In this business the move is known as a “relief rally”. To the uninitiated, it might seem a bit rum for the share price of Switzerland’s second-largest bank to rise after announcing it had pleaded guilty to aiding US tax evaders and agreeing to pay a cool $2.815 billion to settle matters.

But Credit Suisse’s share price was up more than 1 per cent late yesterday afternoon, after having risen by around 2.8 per cent earlier in the day (source: Bloomberg). Partly, it seems that investors had known that the Zurich-listed bank was likely to plead guilty and make a deal for some time (investigations into the bank have run for around three years), but also because of what did not happen yesterday.

For a start, Credit Suisse appears to have dodged the bullet of losing bank licenses in the US – such a move would have been calamitous and frankly, likely to have lit a very fierce fire under chief executive Brady Dougan. So the following wording from the bank’s statement will have cheered investors somewhat: “The resolution of this matter was coordinated with its lead global regulators, and Credit Suisse expects no impact on its licenses, nor any material impact on its operational or business capabilities.” After all, while Credit Suisse is a titan compared with Wegelin, the venerable Swiss bank that has ceased to operate in the US and repackaged its Swiss business, the example of what happened to Wegelin will have weighed on people’s minds.

The punishment inflicted on Credit Suisse compares with what happened in 2009 at UBS, where that firm paid a $780 million settlement to deal with civil charges of aiding tax evaders, and in a separate matter, settled criminal charges also. Client details of UBS were transferred, provoking serious debate on whether Swiss bank secrecy is nearing its end. It seems that the UBS affair was the start of a relentless move by US and other governments against Swiss banks.

So what now for Credit Suisse? Analysts Kinner Lakhani and Nicholas Herman of Citi said in a note yesterday that beyond the immediate details of the settlement in the US, the key issue remains “potential impacts of the guilty plea, including the reaction by CS clients and counterparties”. “While we expect that this event has been well-flagged and the impact likely to be muted, there is always the small risk of unintended consequences,” they wrote.

The analysts also note that with firms such as Barclays taking bold steps to restructure (Barclays has made sharp cuts in investment banking) and capital-raising moves by Deutsche Bank (as reported here yesterday), it puts pressure on Credit Suisse to stay sharp. Recent results on the wealth management side have been pretty decent. Private banking and wealth management pre-tax income rose 15 per cent year-on-year to SFr1.012 billion ($1.149 billion), while net revenues slipped 1.0 per cent to SFr3.24 billion in the same period. Overall, the Citi analysts say that Credit Suisse remains an attractive proposition and reiterated their buy recommendation on the firm.

Away from the tax wrangle, the past 12 months or so have been busy for this firm, particularly on the merger and acquisition front. It acquired part of the non-US wealth management business of Morgan Stanley; it has sold a German private banking business to ABN AMRO, and spun off the Clariden Leu (Europe) operation in London. It must hope that with this expensive and embarrassing tax evasion misbehavior out of the way, it can focus on a period of straightforward growth. We must hope so – the saga of Swiss banks and their issues in the US has, to be blunt, gone on far too long.