UBS Group AG faces hundreds of millions of dollars in penalties over Credit Suisse’s mishandling of Archegos Capital, after UK, Swiss and US regulators completed their investigations, the Financial Times reported on Monday.
UBS has asked the US Federal Reserve, the Swiss Financial Market Supervisory Authority (FINMA) and UK’s Prudential Regulation Authority to publish their findings and announce any penalties jointly at the end of July, the FT wrote.
Britain’s regulator could impose a fine of up to 100 million pounds (CHF114.6 million), while the US Federal Reserve could impose a penalty of up to $300 million (CHF269 million), the newspaper reported, adding that Credit Suisse had set aside just $35 million for potential fines.
Switzerland’s FINMA does not have the power to fine financial institutions, its president Marlene Amstad said in May. However, the body is planning to publish a report after completing its investigation into the Credit Suisse-Archegos issues, the FT wrote.
Archegos’ collapse stemmed from its founder Bill Hwang’s aggressive use of total return swaps, a type of financial contract, to boost the effective size of his market positions. The New York-based firm’s demise caused billions of dollars in losses for Credit Suisse.
UBS completed its emergency takeover of embattled rival Credit Suisse last week, forging a Swiss banking and wealth management giant with a $1.6 trillion balance sheet. It set aside $4 billion for potential lawsuits on the Credit Suisse deal in May, according to a presentation.
The US Federal Reserve declined to comment, while UBS, FINMA, and the Prudential Regulatory Authority did not immediately respond to requests for comment.
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Credit Suisse to operate under own flag after UBS takeover
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Swiss bank Credit Suisse will continue to function under its own name as a separate subsidiary of UBS in the first phase of the takeover process.
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