UBS Faces Huge Fines for Credit Suisse’s Mistakes in Archegos Capital Management Scandal

The big bank must pay for mistakes Credit Suisse made in the treatment of the investment company Archegos Capital Management, according to US and UK financial authorities.

UBS must pay fines related to the acquisition of Credit Suisse. Photo: Ennio Leanza / APPPublished: Published:

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In June, Switzerland’s largest bank, UBS, completed the purchase of the troubled bank Credit Suisse.

Now UBS must pay a total of 387 million dollars (nearly NOK 3.9 billion at today’s exchange rate) in fines to the American and British authorities as a result of unsafe credit practices at Credit Suisse.

The background is the collapse of the investment company Archegos Capital Management.

Despite warnings

On Monday, the US central bank (Fed) announced that they has reached an agreement with UBS about a fine of 268.5 million dollars.

The Fed writes that the fine comes because of Credit Suisse’s connections with Archegos Capital Management.

The investment company was a family office led by manager Bill Hwang. During the spring of 2021, the company shook Wall Street, when it broke the margin requirements on positions linked to a number of shares. These breaches led to a number of banks launching massive foreclosures as share prices fell.

Since then, Archegos has been accused of fraud and price manipulation.

The Fed writes in its statement that Credit Suisse failed to manage the risk related to Archegos Capital Management despite repeated warnings. The authority requires Credit Suisse to improve risk management and address deficiencies in its US operations.

Historic fine from the Bank of England

Also the British central bank announces the fine of Credit Suisse Monday. The fine has a limit of £87 million for failed risk management in the period 1 January 2020 to 31 March 2021 for the exposure to Archegos.

The UK’s Prudential Regulation Authority (PRA) writes that they are part of a globally coordinated resolution together with Swiss supervisory authorities and the US Federal Reserve. The total penalty imposed has a limit of 387.5 million dollars.

Governor Sam Woods issues a statement from the PRA:

– Credit Suisse’s failure to manage risk effectively was extremely serious and created a major threat to the safety and soundness of the firm. The seriousness and prevalence of these errors has led to today’s fine, which is the largest ever imposed by the PRA.

Bank of England Governor Sam Woods says the fine against Credit Suisse is the largest ever in the central bank’s history. Photo: ANNA GORDON / AFP
2023-07-24 19:41:49
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