Washington: The US Federal Reserve announced that Swiss banking giant UBS was fined a total of $387 million on Monday for misconduct by its recently acquired subsidiary Credit Suisse.
Swiss regulators prompted UBS to acquire its former rival Credit Suisse earlier this year amid a banking crisis triggered by the collapse of US regional lender Silicon Valley Bank.
In a statement, the Fed announced that UBS had been fined a total of $387 million by the Fed and the Bank of England over Credit Suisse’s failure to “adequately manage” the risk posed by American family investment fund ArcGos, despite repeated warnings.
The dramatic implosion of the family hedge fund run by Bill Hwang caused Credit Suisse to lose about $5.5 billion, AFP informed of.
The Fed said “misconduct with ArcGos included Credit Suisse’s unsafe and unhealthy counterparty credit risk management practices”, and announced a $268.5 million consent order and fine for UBS.
The Fed announced that the Bank of England’s Prudential Regulation Authority would also impose fines on Credit Suisse’s new owner, adding that the total amount of fines imposed by both regulators would be approximately $387 million.
The Fed said the action against UBS is being coordinated with the Swiss Financial Market Supervisory Authority.