The big bank must pay for mistakes made by Credit Suisse in the transaction of investment firm Archegos Capital Management, according to US and UK financial authorities.
In June, Switzerland’s largest bank, UBS, completed the purchase of troubled Credit Suisse.
Now UBS has to pay a total of $387 million (approximately NOK 3.9 billion at today’s exchange rate) in fines to US and UK authorities as a result of Credit Suisse’s unsafe credit practices.
The background is the collapse of the investment firm Archegos Capital Management.
Despite the warnings
On Monday, the US Central Bank (Fed) announced that it has reached an agreement with UBS About $268.5 million.
The Fed wrote that the fine comes because of Credit Suisse’s ties to Archegos Capital Management.
The investment firm was a family office led by director Bill Hwang. During the spring of 2021, the company rocked Wall Street, when it broke margin requirements on positions linked to a number of stocks. These violations led to a number of banks foreclosing mortgages massively as stock prices plummeted.
Since then, Archegos has been accused of fraud and price gouging.
In its statement, the Fed wrote that Credit Suisse failed to manage risks related to Archegos Capital Management despite repeated warnings. The authority is asking 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 Announcing a Credit Suisse fine Monday. The fine is a maximum of £87m for a failed risk management from 1 January 2020 to 31 March 2021 exposure to Archegos.
The UK’s Prudential Regulatory Authority (PRA) writes that it is part of a globally coordinated decision together with Swiss supervisory authorities and the US Federal Reserve. The total penalty imposed is $387.5 million.
Governor Sam Woods issues a statement from the PRA:
Credit Suisse’s failure to effectively manage risk was extremely serious and created a significant threat to the integrity and integrity of the company. The seriousness and prevalence of these errors led to the imposition of a fine today, which is the largest fine ever imposed by the Code of Civil Procedure.
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