DThe major Swiss bank UBS is paying more than $380 million in fines in the US and UK for recently acquired competitor Credit Suisse. It is primarily about misconduct in risk management in transactions with the hedge fund Archegos, which collapsed spectacularly.
In the US, UBS agreed to a fine of $268.5 million (242.3 million euros), the Federal Reserve announced on Monday. In the UK, the Prudential Regulation Authority imposed a record fine of £87m (€101m).
Among other things, the Federal Reserve identified a lack of adequate risk management models and experienced employees at Credit Suisse. The British supervisor criticized that Credit Suisse had not learned enough from previous cases and had not eliminated the deficiencies already mentioned.
The Swiss financial market supervisory authority Finma ordered corrective measures. She also opened a case against “a former executive of Credit Suisse”. Finma did not comment on the identity of this person or details of the procedure. UBS emphasized that its risk management rules are already being implemented at Credit Suisse.
The hedge fund Archegos of financier Bill Hwang had accumulated positions in individual stocks, some of which were very high, in a risky manner. When some stocks fell in price, Archegos didn’t have enough funds to make up for the losses and collapsed in 2021. Credit Suisse was slower than other banks to unwind open positions in Archegos deals and posted a billion-dollar loss. The Archegos debacle was one of the reasons Credit Suisse stumbled and was eventually acquired by UBS. The big bank merger was completed in June.
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