UBS set to pay huge fines over Credit Suisse’s Archegos failings

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UBS agreed to acquire Credit Suisse for $3.2bn in March 2023

UBS is reportedly to set to pay out hundreds of millions of dollars in fines over Credit Suisse’s failings linked to the collapsed hedge fund Archegos Capital.

Credit Suisse was one of the banks hardest hit by the collapse of Archegos, with the bank facing losses of around $5.5bn. In contrast, UBS faced a $861m loss. 

Regulators in the UK, US and Switzerland have completed their investigation into Credit Suisse’s relationship with the hedge fund, which collapsed in 2021, the Financial Times reported.

The UK’s banking regulator, the Prudential Regulation Authority, could impose a £100m fine while the US Federal Reserve might impose a penalty of up to $300m, the paper reported.

Finma, the Swiss financial markets regulator, has no power to fine the banks it supervises, although it has called for more powers following Credit Suisse’s collapse. 

UBS has asked regulators in the US, UK and Switzerland to publish their findings from investigations into Credit Suisse’s mishandling of Archegos Capital before the end of July, the Financial Times reported.

UBS, the PRA and Finma declined to comment. Credit Suisse and the Federal Reserve did not immediately respond to requests for comment.

Archegos Capital, managed by investor Bill Hwang, made tens of billions through bets on US and Chinese stocks by borrowing extensively from banks. 

However, these had to be unwound rapidly when the value of these companies fell and Archegos was unable to make margin calls. 

Archegos is one of a string of scandals that still hang over Credit Suisse. Earlier this year Finma found that Credit Suisse had “seriously breached” its supervisory obligations in its relationship with Greensill Capital while just last month Credit Suisse was ordered to pay Georgia’s ex-prime minister $926m by a Singapore court. 

UBS has already flagged that it will face hefty losses from its emergency acquisition of Credit Suisse. Last month it revealed it had set aside $4bn for potential lawsuits relating to the takeover.