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

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.