UBS Agrees to Pay Fine in Archegos Case.
Published: Monday, Jul 24th 2023, 18:40
Actualizado el: Viernes, Oct 13th 2023, 14:12
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The UBS has reached an agreement with authorities in the Archegos case concerning the acquired Credit Suisse. The bank will pay a total of 388 million US dollars in fines. This agreement also closes the investigation against the CS by the Swiss Financial Market Supervisory Authority (Finma). As part of the agreement, 269 million dollars will be paid to the US Federal Reserve and 119 million dollars to the British Financial Services Authority (PRA). Finma found that the Credit Suisse had seriously and systematically violated financial market law in the context of its relationship with the Archegos family office. In March 2021, several investment banks suffered large losses due to the collapse of the US hedge fund Archegos. The CS suffered the largest loss of over five billion dollars. The investigation against the bank is now closed with the agreement, but the Federal Reserve and Finma have both ordered "corrective measures" with regard to risk management. Finma has also opened an enforcement procedure against a former CS manager. Finma found "serious" deficiencies in the CS in connection with the relationship with Archegos. The bank was not able to adequately identify, limit and monitor the significant risks associated with Archegos. The bank's own position due to the relationship with Archegos was extremely high at 24 billion dollars in March 2021, four times the position of the next largest hedge fund customer and more than half of the bank's own capital. Finma requires UBS to apply its restrictions on own positions in relation to individual customers to the entire financial group. In addition, there must be bonus allocation criteria in the remuneration system that take into account the risk appetite. The UBS already knows corresponding rules, which the authority now orders legally binding. The bank has stated that it will embed its risk management principles and corporate culture in the entire combined organization. The remaining legal cases and regulatory matters of the CS are to be settled in the best interest of all stakeholders. The fines will result in an additional provision in the second quarter. The UBS acquired the CS on June 12, 2023 and will present the Q2 results at the end of August.
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