Credit Suisse’s relationship with family office Archegos Capital is set to hit UBS following investigations by UK, Swiss and US regulators.
Hundreds of millions in potential penalties could come just days after UBS UBS, -0.05% UBSG, -1.41% completed its acquisition of its beleaguered Swiss rival in a landmark deal backed by the Swiss government, the Financial Times reported.
Fines from the US and UK could range between $100m and $300m, people familiar with the matter told the FT.
Credit Suisse had set aside around $35m for likely fines stemming from Archegos, amid an overall $5.5bn hit from the collapse of the firm – the biggest among the $10bn fallout for global banks that offered prime broking services. At the time, UBS’s losses stood at around $861m.
Investments held by Archegos plummeted in March 2021, forcing Credit Suisse and other lenders to sell large positions at losses. The Swiss bank had lent more to Archegos relative to its size and was also among the last to exit the positions, The Wall Street Journal previously reported.
The fiasco pushed Credit Suisse to cut its dividend and raise fresh capital from investors to shore up its balance sheet. Top executives were also ousted in the wake of the loss as a Credit-Suisse commissioned report by law firm Paul Weiss revealed a “fundamental failure of management and controls” in its investment bank and a “lackadaisical attitude towards risk”.
The FT reports that according to people familiar with the matter, Credit Suisse has requested the publication of regulatory findings by the end of July.
UBS has a $4bn provision to deal with any litigation and regulatory fallout on the back of its takeover in March.