US & UK imposes a fine on UBS Group AG

Jul 25, 2023

b 1The US Federal Reserve Board on Monday announced a consent order and a $268.5 million fine with UBS Group AG, of Zurich, Switzerland, for misconduct by Credit Suisse, which UBS subsequently acquired in June 2023. The misconduct involved Credit Suisse’s unsafe and unsound counterparty credit risk management practices with its former counterparty, Archegos Capital Management LP.

In the row, the Bank of England announced that, the Prudential Regulation Authority has fined Credit Suisse International and Credit Suisse Securities-Europe Ltd £87 million for significant failures in risk management and governance between 1 January 2020 and 31 March 2021, in connection with the Firms’ exposures to Archegos Capital Management.

In 2021, Credit Suisse suffered approximately $5.5 billion in losses because of the default of Archegos, an investment fund. During Credit Suisse’s relationship with Archegos, Credit Suisse failed to adequately manage the risk posed by Archegos despite repeated warnings. The Board is requiring Credit Suisse to improve counterparty credit risk management practices and to address additional longstanding deficiencies in other risk management programs at Credit Suisse’s U.S. operations.

The Board’s action is being taken in conjunction with actions by the Swiss Financial Market Supervisory Authority and the Bank of England’s Prudential Regulation Authority. The penalties announced by the Board and the Prudential Regulation Authority total approximately $387 million.

On the June 12, 2023, UBS had announced that, UBS has completed the acquisition of Credit Suisse, crossing an important milestone. Credit Suisse Group AG has been merged into UBS Group AG and the combined entity will operate as a consolidated banking group.

 

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