UBS faces hundreds of millions of dollars in fines

According to the Financial Times, UBS Group AG is facing hundreds of millions of dollars in fines due to its acquisition of Credit Suisse and its dealings with Archegos Capital. Many banks and financial institutions around the world were negatively affected by the massive share sales of US investment fund Archegos in 2021. The newspaper reported, citing sources familiar with the matter, that UBS has asked Swiss banking regulator FINMA, the Fed and the UK’s Prudential Regulation Authority (PRA) to announce their findings and the penalty to be imposed by the end of the month. According to the FT report, the Fed’s maximum fine for UBS over the Archegos-Credit Suisse business could be $300 million, while the PRA’s fine could be $128 million. FINMA does not have the authority to impose fines. Archegos’ collapse stemmed from founder Hwang’s heavy use of total return swaps, a type of financial contract, to increase the effective size of his market positions. The collapse of the New York-based firm resulted in billions of dollars in losses for Credit Suisse.