International banking big UBS has been fined greater than 1 / 4 billion {dollars} for misconduct at Credit score Suisse, its new subsidiary acquired in June.
In a press launch from the Board of Governors of the Federal Reserve, the Fed says the fees are centered on Credit score Suisse’s “unsafe and unsound counterparty credit score threat administration practices” with Archegos, a household workplace that collapsed in March of 2021.
Archegos, which represented the private belongings of Korean American investor Invoice Hwang, was price $36 billion at its peak earlier than going beneath resulting from overly aggressive leverage and dangerous trades. Bloomberg reported that Hwang misplaced $20 billion in beneath two days.
Due to its relationship with Hwang, Credit score Suisse suffered roughly $5.5 billion in losses resulting from Archegos’ default, one thing the Fed says would have been avoidable with correct credit score threat administration.
“Throughout Credit score Suisse’s relationship with Archegos, Credit score Suisse did not adequately handle the danger posed by Archegos regardless of repeated warnings.
The Board is requiring Credit score Suisse to enhance counterparty credit score threat administration practices and to deal with extra longstanding deficiencies in different threat administration packages at Credit score Suisse’s U.S. operations.”
The Board of Governor’s nice in opposition to UBS is being issued together with the Swiss Monetary Market Supervisory Authority and the Financial institution of England’s Prudential Regulation Authority.
UBS, which has $3.1 trillion in belongings beneath administration, can also be being ordered by the Fed to take applicable steps to make sure that its subsidiaries and branches of Credit score Suisse function in a secure method, complies with rules, and addresses supervisory motion taken by federal and state supervisors.
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