Bank Fined Over $250 Million Over Risk Management Practices

Global banking giant UBS faces a substantial fine of over a quarter billion dollars due to misconduct at its newly acquired subsidiary, Credit Suisse.

The fine was imposed by the Board of Governors of the Federal Reserve and is related to Credit Suisse's "unsafe and unsound counterparty credit risk management practices" involving Archegos, a family office that collapsed in March 2021.

Archegos, owned by Korean American investor Bill Hwang, once boasted assets worth $36 billion before its downfall, triggered by reckless leveraging and poor trades, leading Hwang to lose $20 billion in less than two days.

As a result of its association with Archegos, Credit Suisse incurred substantial losses of around $5.5 billion due to the office's default, which the Federal Reserve states could have been prevented with proper credit risk management.

The Federal Reserve's enforcement action mandates Credit Suisse to enhance its counterparty credit risk management practices and address long-standing deficiencies in other risk management programs within its U.S. operations.

The fine imposed on UBS by the Board of Governors is jointly issued with the Swiss Financial Market Supervisory Authority and the Bank of England's Prudential Regulation Authority.

UBS, managing assets worth $3.1 trillion, is also instructed by the Federal Reserve to take necessary measures to ensure the safe operation of its subsidiaries and Credit Suisse branches.