Trillion-Dollar Bank Had To Pay $268,500,000 Fine

UBS, a major global bank, has been penalized over $250 million for misconduct at its newly acquired subsidiary, Credit Suisse.

The Federal Reserve Board of Governors issued a press release stating that the charges stem from Credit Suisse’s “unsafe and unsound counterparty credit risk management practices” with Archegos, a family office that collapsed in March 2021.

Archegos, which was managed by Korean American investor Bill Hwang, had reached a peak value of $36 billion before collapsing due to excessive leverage and poor trades. According to Bloomberg, Hwang suffered a loss of $20 billion in less than two days.

Credit Suisse suffered losses of approximately $5.5 billion due to Archegos’ default, which was linked to its relationship with Hwang.

The Federal Reserve stated that this loss could have been prevented if Credit Suisse had proper credit risk management practices in place.

The Board found that Credit Suisse did not adequately manage the risk posed by Archegos, despite repeated warnings.

As a result, the Board has ordered Credit Suisse to improve its counterparty credit risk management practices and address other long-standing deficiencies in its risk management programs at its U.S. operations.

UBS has also been fined by the Board, in conjunction with the Swiss Financial Market Supervisory Authority and the Bank of England’s Prudential Regulation Authority.

With $3.1 trillion in assets under management, UBS is required to ensure that its subsidiaries and branches of Credit Suisse operate in a safe manner, comply with regulations, and address supervisory action taken by federal and state supervisors.

The Federal Reserve has ordered UBS to take appropriate steps to achieve these goals.

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