UBS to pay nearly $400m for Credit Suisse misconduct

Fines imposed by US Federal Reserve and Bank of England are first imposed on Swiss banking giant since takeover

Swiss banking giant UBS has been fined close to $400 million for misconduct by its recently acquired subsidiary, Credit Suisse. AFP
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Swiss banking giant UBS on Monday agreed to pay nearly $400 million in fines as a result of misconduct by Credit Suisse, its recently acquired subsidiary.

The Federal Reserve imposed a $268.5 million fine after Credit Suisse “failed to adequately manage the risk posed” by family asset management company Archegos Capital despite repeated warnings from the Fed.

Meanwhile, the Bank of England's Prudential Regulation Authority is fining UBS £87 million ($111.6 million). It is the largest-ever fine imposed by the PRA.

UBS was required to pay about $387 million in total, the Fed said.

The 2021 collapse of Archegos resulted in more than $10 billion lost across major Wall Street banks. Credit Suisse had suffered about $5.5 billion in losses.

“Credit Suisse’s failures to manage risks effectively were extremely serious, and created a major threat to the safety and soundness of the firms,” said Sam Woods, PRA chief executive.

The bank is also required to improve its credit risk management practices and address other “long-standing deficiencies” in programmes for business Credit Suisse conducts in the US, the Fed said.

Swiss financial regulator Finma also ordered corrective measures from UBS after it found Credit Suisse “had seriously and systematically violated financial market law in the context of its business relationship with the Archegos family office”.

Among those deficiencies identified by Finma were building up concentrated risks. Archegos was left owing billions after those securities' values plummeted.

“In particular, the bank was unable to adequately identify, limit and monitor the significant risks associated with Archego,” the Swiss regulator said.

Finma said it has also opened enforcement protocols against a former Credit Suisse manager.

UBS said it has started to implement “its risk framework, including actions addressing these regulatory findings, across Credit Suisse”.

UBS acquired Credit Suisse in June after the tumult in the global banking sector sparked by the collapse of Silicon Valley Bank. Monday's fine was the first imposed since the takeover.

Updated: July 24, 2023, 7:44 PM