UBS Group faces hundreds of millions of dollars in regulatory fines over Credit Suisse Group’s dealings with Archegos Capital, as the Swiss bank inherits its former rival’s entire litigation portfolio, according to a person familiar with the matter.
The Federal Reserve’s fine over Archegos may be as high as $300 million, while the U.K.’s Prudential Regulation Authority could impose a penalty of up to $128 million, the person said. Switzerland’s financial regulator doesn’t have the authority to impose fines.
UBS’ acquisition of its stricken rival closed earlier this month, handing Chief Executive Sergio Ermotti a potential windfall gain this quarter in the tens of billions of dollars after the government-brokered rescue. At the same time, UBS has previously guided that legal liabilities related to Credit Suisse could run to as much as $4 billion over 12 months, and asset mark-downs could come in at some $13 billion.
Unlike other banks working with the family office that managed Bill Hwang’s fortune, Credit Suisse was slow to unwind its positions and ended up with a $5.5 billion losses related to that business in 2021. UBS suffered a much smaller loss.
UBS erased earlier gains to trade down 1.4% at $20.343 as of 11:12 a.m. in Zurich. The shares have gained 7.5% this year.
The bank had asked Finma, the Fed and the PRA to publish their findings and announce any penalties jointly at the end of next month, according to the Financial Times, which first reported that UBS would face some penalties.
UBS declined to comment. Finma wasn’t immediately available for comment. PRA didn’t respond to a request for comment.
UBS has inherited a long list of unresolved cases following the completion of its emergency takeover of Credit Suisse. They span a criminal conviction for facilitating a Bulgarian cocaine trafficker’s money laundering to a half-billion-dollar settlement in a bribery scandal related to a tuna fishing fleet in Mozambique.
Ermotti has signaled that Credit Suisse’s investment banking unit, which was at the center of the Archegos debacle, is in for a “massive downsizing” as part of the integration into UBS.
A private partnership, Edward Jones is a giant in the retail brokerage industry with more than 20,000 financial advisors.
Meanwhile, Raymond James and Tritonpoint Partners separately welcomed father-son teams, including a breakaway from UBS in Missouri.
Paul Atkins has asked staff to solicit public comment on novel ETFs, pausing the clock on as many as 24 filings linked to the booming event contracts market.
From 401(k)s to retail funds, Deloitte sees private equity and credit crossing into mainstream investing on two fronts at once.
Big-name defections from Morgan Stanley, UBS, and Merrill Lynch headline a busy two weeks of recruiting for the wirehouse.
Wellington explores how multi strategy hedge funds may enhance diversification
As technical expertise becomes increasingly commoditized, advisors who can integrate strategy, relationships, and specialized expertise into a cohesive client experience will define the next era of wealth management
