Failed Swiss Bank Credit Suisse Fined $388 Million by UK and US Regulators

Credit Suisse has been fined a total of more than $387.5 million by U.S. and U.K. regulators because of its alleged failure to manage its former client Archegos Capital Management. 

The failed bank was bought by UBS in March for $3.25 billion to prevent its collapse. Half of its staff of 45,000 faced job cuts earlier this year. Now, it's facing more consequences.

In its announcement of the penalty, issued Monday, the Fed ordered Credit Suisse and its new parent company UBS to pay $268.5 million for its “unsafe” and “unsound” practices surrounding the New York-based, family-owned hedge fund Archegos, its former client. In its order, the Federal Reserve Board alleged that the company’s failure to manage Archegos’s risks resulted in losses of about $5.5 billion. 

Archegos's founder Sung Kook Hwang was charged by the U.S. Department in 2022 with fraudulently pumping up its portfolio to $35 billion from $1.5 billion, resulting in significant losses to multiple banks including Credit Suisse. Credit Suisse had a relationship with Archegos and its predecessor, Tiger Asia Management LLC, dating back to 2003, according to the Fed. 

In 2012, the Securities and Exchange Commission sued Tiger Asia for $44 million for illegal trading.

Meanwhile, The Prudential Regulation Authority, the regulatory arm of the Bank of England, fined Credit Suisse 87 million euros, or just over $96 million, its largest fine ever, for "serious risk management failures," its press statement said.

"Credit Suisse’s failures to manage risks effectively were extremely serious, and created a major threat to the safety and soundness of the firm,” said Sam Woods, Deputy Governor for Prudential Regulation and Chief Executive Officer of the PRA.

UBS said in a press release Monday it plans to implement more "operational and risk management discipline."

"UBS intends to resolve Credit Suisse’s outstanding litigation and regulatory matters in the best interest of its stakeholders, including investors, clients and employees," said the statement.