UBS Group is facing a hefty penalty following its acquisition of Credit Suisse. Regulatory authorities in the United States and the United Kingdom have imposed a hefty fine of about $388 million on UBS for Credit Suisse’s previous shortcomings.
The root cause of this penalty is traced back to Credit Suisse’s lax counterparty credit risk management practices concerning its past associate, Archegos Capital Management LP. This was confirmed in a recent statement issued by the US Federal Reserve.
In addition to the enforcement measures initiated by the Bank of England’s Prudential Regulation Authority, the Federal Reserve of the United States has mandated that Credit Suisse, now under UBS, pays a significant sum of $269 million. The bank is also required to rectify longstanding issues related to risk management in its US operations.
The predicament arose when Credit Suisse incurred losses amounting to approximately $5.5 billion in 2021 due to Archegos’ default, a once-reputed investment fund. Alarmingly, Credit Suisse, during its association with Archegos, overlooked the substantial risk posed despite receiving multiple warnings.
In reaction to this, UBS stated its commitment to enhancing operational and risk management protocols at Credit Suisse. Reported by Reuters, the bank plans to address and resolve any remaining litigation tied to Credit Suisse in a manner that favors all stakeholders, including investors, clients, and employees.
Last June marked the official acquisition of Credit Suisse by UBS, a move that established a formidable presence in European banking and eliminated uncertainty for over 100,000 employees. The merger, approved by the US Securities and Exchange Commission, was contingent on certain stipulated conditions met or waived by UBS, as per an official UBS statement.
This news story is based on an article published on marketing-interactive.com.
