Swiss lobby US ahead of UBS, Credit Suisse RMBS settlements

Both banks claims that they mis-sold mortgage-backed securities

Switzerland urged US officials to consider the global importance of UBS and Credit Suisse in a recent meeting ahead of potential fines for Switzerland's two big banks over claims they mis-sold mortgage-backed securities, a top Swiss diplomat said.

Like with German rival Deutsche Bank, the US Department of Justice (DOJ) is looking into whether UBS and Credit Suisse mis-sold residential mortgage-backed securities (RMBS) in the run-up to the 2007-09 financial crisis.

News broke last month the DOJ had demanded a $14 billion fine from Deutsche, far more than analysts had expected and raising fears UBS and Credit Suisse could also face stiffer penalties. Deutsche has said it will fight the size of the DOJ fine.

In a meeting this month with representatives from US regulators, the Federal Reserve and the banking sector, Joerg Gasser pointed out the significance of UBS and Credit Suisse to the banking system.

"I emphasised to the officials the importance of the Swiss financial centre for the global financial architecture and the systemic relevance of both big Swiss banks and their international importance for financial stability," Gasser, head of the State Secretariat for International Financial Matters, a branch of the finance ministry, told Reuters on Thursday.

Moves by the Swiss government on behalf of its banks in the RMBS case follow steps by the German government to help Deutsche secure a swift settlement, according to sources in Berlin.

Swiss Finance Minister Ueli Maurer said it was looking increasingly unlikely there would be a resolution in the Swiss banks' RMBS cases, as well other legal issues facing Swiss institutions, before the Nov 8 US presidential election.

"We had once hoped that these things would be dealt with before the election," Maurer told Reuters. "But now we do not have the impression there is a lot of eagerness for this."

Just prior to news of the possible $14 billion Deutsche fine in September, JP Morgan analysts estimated UBS and Credit Suisse faced fines of around $2 billion each.

Credit Suisse's litigation provisions at the end of 2015 totalled 1.605 billion Swiss francs ($1.6 billion). As of the end of June, UBS had set aside $988 million in litigation provisions for the RMBS case.

Earlier this month a French parliamentary report said Europe should challenge the United States over its increasingly aggressive use of extraterritorial laws that have cost European companies - especially banks - billions in fines and other settlements.

France's biggest bank BNP Paribas had to pay a $9 billion fine to US authorities over violations of American sanctions against other countries. The French government has criticised in recent years what it considers the over-reach of the US legal system.