Swiss bank faces $655 million in fines from U.S., European regulators over conduct of failed institution it took over

The conduct of a failed Swiss bank has earned the financial institution that took it over in June a $268.5 million fine, the Federal Reserve said Monday, blaming unsafe and unsound counterparty credit risk management practices.

The U.S. agency said it was acting in conjunction with European regulators, including the Swiss Financial Market Supervisory Authority and the Bank of England’s Prudential Regulation Authority. Those agencies levied penalties of their own against Credit Suisse, totaling $387 million, the Fed said.

According to the Fed, the fine was levied against UBS Group AG of Zurich for the misdeeds of Credit Suisse, which UBS acquired earlier this summer following the flop of Credit Suisse in the wake of massive withdrawals. The unsound practices were related to Credit Suisse’s former counterparty, Archegos Capital Management LP, in 2021.

Archegos was a New York, N.Y.-based investment management firm that failed in 2021 after defaulting on margin calls from Credit Suisse and other investment banks.

The Fed, in a release, said Credit Suisse lost about $5.5 billion because of the failure of Archegos. “During Credit Suisse’s relationship with Archegos, Credit Suisse failed to adequately manage the risk posed by Archegos despite repeated warnings,” the Fed said. “The Board is requiring Credit Suisse to improve counterparty credit risk management practices and to address additional longstanding deficiencies in other risk management programs at Credit Suisse’s U.S. operations.”

Federal Reserve Board announces a consent order and a $268.5 million fine with UBS Group AG, of Zurich, Switzerland, for misconduct by Credit Suisse, which UBS subsequently acquired in June 2023