Financial regulatory body imposes a penalties of $268.5 million on UBS due to connections with Archegos, a scandal associated with Credit Suisse.
In a series of regulatory actions, UBS, the Swiss multinational investment bank, is facing penalties totalling potentially billions of dollars over regulatory issues with Credit Suisse and the defunct investment fund Archegos.
The latest addition to these penalties comes from the U.K.'s Prudential Regulation Authority (PRA), which fined UBS £87 million ($112 million), its largest ever fine. This fine, issued on Monday, is in connection with Credit Suisse's dealings with Archegos. The PRA stated that UBS failed to adequately manage the risk posed by Archegos despite repeated warnings.
The Federal Reserve had previously fined UBS $268.5 million for similar unsafe and unsound counterparty credit risk management practices. The exposure to Archegos cost Credit Suisse roughly $5.5 billion in March 2021.
The U.S. Department of Justice (DOJ) also condemned UBS for these practices and UBS paid a fine of $15 million as a penalty.
UBS is expected to pay out as much as $4 billion in legal liabilities over the next year, partly due to taking on Credit Suisse. The bank has begun implementing a risk framework to address these regulatory findings across Credit Suisse.
It's important to note that the issues with Credit Suisse and Archegos occurred prior to UBS acquiring the bank. The PRA did not specify whether the fine would be covered by UBS or Credit Suisse.
Sam Woods, the PRA's CEO, stated that Credit Suisse's failures to manage risks effectively were extremely serious and created a major threat to the safety and soundness of the Firms.
The regulatory issues with Credit Suisse and Archegos are not the first for UBS. These events are part of a larger pattern of regulatory issues that the bank is expected to address.
The statement from UBS regarding the implementation of the risk framework was seen by Bloomberg. UBS is working diligently to address these issues and ensure the safety and soundness of its operations moving forward.
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