US, UK regulators fine UBS $380M over Credit Suisse’s ‘unsafe’ credit risk management practices

UBS fine overview: 

• Who: US and UK regulators fined UBS Group AG more than a combined $380 million. 
• Why: UBS agreed to pay the fine to resolve claims related to the relationship between its former rival Credit Suisse — which it purchased earlier this year — and the defunct private investment fund Archegos Capital Management. 
• Where: The fines were issued by regulators in the US and UK.

Regulators in the US and UK have fined UBS Group AG more than $380 million due to business dealings its former Swiss rival Credit Suisse had with Archegos Capital Management, a private investment fund that collapsed in 2021. 

Credit Suisse — which was purchased by UBS earlier this year — was left on the hook for more than $5 billion in losses following Archegos’ failure to meet a margin call in March 2021, reports Law360. 

The Federal Reserve accused Credit Suisse of having “unsafe and unsound counterparty credit risk management practices” with its dealings with Archegos, with UBS agreeing to pay a $268.5 million fine to the Fed to resolve the claims. 

UBS will also pay a fine of $119 million to resolve similar claims brought against Credit Suisse by the UK’s Prudential Regulation Authority, reports Law360. 

FINMA finds Credit Suisse ‘seriously and systematically violated financial market law’ with Archegos relationship

The fines came the same day the Swiss Financial Market Supervisory Authority (FINMA) said it finished its own enforcement proceedings against Credit Suisse, which it found “seriously and systematically violated financial market law” with its relationship with Archegos. 

While FINMA does not have the authority to impose a financial penalty, the agency said it has ordered Credit Suisse and the company’s now-parent UBS to implement “corrective measures,” reports Law360. 

UBS has reportedly been operating Credit Suisse as a separate bank being worked alongside its main UBS AG unit. 

In a statement, UBS vowed to “implement its operational and risk management discipline and its culture across the combined organization,” and said it has already “begun implementing its risk framework, including actions addressing these regulatory findings.” 

“UBS intends to resolve Credit Suisse’s outstanding litigation and regulatory matters in the best interest of its stakeholders, including investors, clients and employees,” the bank said. 

A separate fine was imposed to Credit Suisse — along with Barclays, RBS, and HSBC — in December 2021 by the European Union’s antitrust commission over claims the banks colluded around foreign exchange trading. 

What are your thoughts on the fines imposed on UBS? Let us know in the comments! 

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