UBS Group AG is facing hundreds of millions of dollars in penalties for its acquisition of Credit Suisse, for its deals with Archegos Capital.
After the sale of large shares of the US investment fund Archegos in 2021, many banks and financial institutions around the world were negatively affected by the situation.
In the news that the newspaper based on knowledgeable sources on the subject, it was stated that UBS asked the Swiss banking regulation and supervisory agency FINMA, the Fed and the UK’s Prudential Regulatory Authority (PRA) to announce their findings and the penalty to be imposed by the end of the month.
According to the FT report, the maximum penalty the Fed will impose on UBS for Archegos-Credit Suisse works is $300 million, and the penalty of PRA can be up to $128 million. FINMA does not have the power to impose penalties.
Archegos’ collapse was due to its founder Hwang’s drastic use of total return swaps, a type of financial contract, to increase the effective size of market positions. The collapse of the New York-based firm resulted in billions of dollars in losses for Credit Suisse.