Financial Institutions Under Scrutiny: UBS Faces $387m Penalty for Alleged Misconduct by Credit Suisse
WASHINGTON: UBS, the Swiss banking giant, has been fined a total of $387 million by the US Federal Reserve for misconduct by its subsidiary, Credit Suisse, which UBS recently acquired. The fine comes after Credit Suisse’s failure to adequately manage the risk posed by the US family investment fund Archegos, despite repeated warnings.
The collapse of the family hedge fund, run by Bill Hwang, resulted in approximately $5.5 billion in losses for Credit Suisse. The Federal Reserve stated that the misconduct involved Credit Suisse’s unsafe and unsound counterparty credit risk management practices with Archegos, leading to the fine of $268.5 million for UBS.
In addition to the Federal Reserve’s fine, the Bank of England’s Prudential Regulation Authority will also be fining Credit Suisse’s new owner. The combined fines by the two regulators will amount to approximately $387 million.
The action against UBS is being taken in conjunction with the Swiss Financial Market Supervisory Authority. The Swiss regulators had urged UBS to acquire Credit Suisse amid a banking crisis triggered by the collapse of US regional lender Silicon Valley Bank earlier this year.
