UBS to pay US$388m over Credit Suisse misconduct

UBS Group has been requested to pay approximately US$388 million to British and U.S. regulators for misconduct by Credit Suisse, which UBS subsequently acquired in June.

The misconduct involved Credit Suisse's unsafe and unsound counterparty credit risk management practices with its former counterparty, Archegos Capital Management LP, according to a statement released by the US Federal Reserve on Monday.

Apart from actions taken by the Bank of England's Prudential Regulation Authority, the U.S. Federal Reserve has ordered Credit Suisse to pay US$269m. The Federal Reserve Board is requiring Credit Suisse to improve counterparty credit risk management practices and to address additional longstanding deficiencies in other risk management programmes at Credit Suisse's U.S. operations.

This came as Credit Suisse suffered approximately US$5.5 billion in losses in 2021 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.

In response, UBS said it would improve in-house operational and risk management discipline at Credit Suisse after it completely took over the company, according to Reuters. The bank also looks to resolve Credit Suisse's remaining litigation in "the best interest of its stakeholders, including investors, clients and employees."

Don't miss: UBS expects to complete Credit Suisse acquisition as early as 12 June

Back in June, UBS completed its acquisition of Credit Suisse, which created a new powerhouse in European banking and end the uncertainty for more than 100,000 employees of the company. The plan saw Credit Suisse Group AG merging with UBS Group AG. Completion was subject to the registration statement, which covered shares to be delivered, being declared effective by the US Securities and Exchange Commission, and to satisfaction, or waiver by UBS, of other remaining closing conditions, according to a statement by UBS.

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