UBS to Pay $387M in Credit Suisse-Linked Archegos Fines

The fines wrap up one of many legal and regulatory issues that UBS will aim to resolve after completing the purchase. The firm also faces a potential civil trial over a scandal in Mozambique and scrutiny into dealings with Russian oligarchs. U.S. lawmakers last week also pushed Credit Suisse to cooperate with a probe into allegations the bank concealed information about accounts held by Nazis in the decades after World War II.

UBS said that Credit Suisse would record a provision tied to the matter in its second-quarter results, which UBS would reflect in its purchase accounting for the deal. UBS is set to announce the combined firm’s second-quarter earnings next month.

UBS “has already begun implementing its risk framework, including actions addressing these regulatory findings, across Credit Suisse,” the bank said in a statement Monday.

Credit Suisse two years ago published a 172-page report into its failings that was prepared by the law firm Paul, Weiss, Rifkind, Wharton & Garrison LLP. Regulators cited details from that report, including that in early 2021 the bank’s credit risk management team downgraded Archegos’s credit rating internally, while also more than doubling Archegos’s potential exposure limit to $50 million.

The Swiss financial regulator, Finma, also ordered corrective measures for UBS as the regulator concluded that Credit Suisse had violated financial-market law in its relationship with Archegos.

“The bank was unable to adequately identify, limit and monitor the significant risks associated with Archegos,” Finma said in a statement. The regulator doesn’t have the authority to impose fines.

UBS also faces legal entanglements from Credit Suisse’s involvement with Greensill Capital, which collapsed around the same time as Archegos. Credit Suisse was sued in Japan earlier this month over bonds linked to one of the funds it ran with Lex Greensill’s now-defunct supply chain finance empire.