UBS to pay hefty fine for Credit Suisse’s Archegos mishaps – FT

(Reuters) – UBS Group AG faces potential penalties amounting to hundreds of millions of dollars over Credit Suisse’s mishandling of Archegos Capital, according to a report by the Financial Times on Monday.

UBS has requested the U.S. Federal Reserve, the Swiss Financial Market Supervisory Authority, and the UK’s Prudential Regulation Authority to release their findings and jointly announce any penalties by the end of July, as reported by FT.


According to the newspaper, the UK’s Prudential Regulation Authority could impose a fine of up to £100 million ($127.81 million), while the U.S. Federal Reserve could impose a penalty of up to $300 million. Credit Suisse, on the other hand, has only set aside $35 million for potential fines.

The Swiss Financial Market Supervisory Authority, as stated by its president Marlene Amstad in May, does not possess the authority to fine financial institutions.

The collapse of Archegos Capital was a result of its founder Hwang’s aggressive use of total return swaps, a type of financial contract, to amplify the size of his market positions. This collapse led to billions of dollars in losses for Credit Suisse.

Last week, UBS completed its emergency takeover of troubled competitor Credit Suisse, creating a Swiss banking and wealth management powerhouse with a $1.6 trillion balance sheet.

In May, UBS allocated $4 billion for potential lawsuits related to the Credit Suisse deal, according to a presentation.

The U.S. Federal Reserve declined to comment, while UBS, the Swiss Financial Market Supervisory Authority, and the Prudential Regulation Authority did not immediately respond to requests for comment.

($1 = 0.7824 pounds)

(Reporting by Chandni Shah in Bengaluru; Editing by Lisa Shumaker and Jonathan Oatis)

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