UBS to pay $387M in fines linked to Credit Suisse’s dealings with Archegos

The fines imposed by the Federal Reserve and the Bank of England's Prudential Regulation Authority follow UBS guidance that legal liabilities related to Credit Suisse could total $4 billion.

UBS Group will pay a total of about $387 million in fines related to misconduct by Credit Suisse Group in its dealings with Archegos Capital Management.

In a consent order with the Federal Reserve, UBS agreed to pay $268.5 million for “unsafe and unsound counterparty credit-risk management practices” at Credit Suisse, which UBS acquired in June. The Bank of England’s Prudential Regulation Authority fined the bank £87 million ($112 million), which it said was its largest penalty to date.

UBS’s acquisition of its stricken rival closed last month, handing Chief Executive Sergio Ermotti a potential windfall gain in the tens of billions of dollars after the government-brokered rescue. At the same time, UBS has previously provided guidance that legal liabilities related to Credit Suisse could run to as much as $4 billion over 12 months, and asset markdowns could come in at some $13 billion.

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.