The Federal Reserve Board (FRB) has announced a consent order and US$268.5 million fine with UBS Group AG for misconduct by Credit Suisse, which UBS subsequently acquired in June 2023.
The misconduct involved Credit Suisse's unsafe and unsound counterparty credit risk management practices with its former counterparty, Archegos Capital Management LP.
The Federal Reserve and FINMA have imposed remedial requirements relating to credit, liquidity and non-financial risk management as well as oversight of remedial efforts.
In 2021, Credit Suisse suffered approximately US$5.5 billion in losses because of the default of Archegos, an investment fund.
During Credit Suisse's relationship with Archegos, Credit Suisse failed to adequately manage the risk posed by Archegos despite repeated warnings, says the FRB.
The board has said Credit Suisse must improve counterparty credit risk management practices and must address additional long-standing deficiencies in other risk management programmes at Credit Suisse's US operations.
The board's action is being taken in conjunction with actions by the Swiss Financial Market Supervisory Authority and the Bank of England's Prudential Regulation Authority.
The penalties announced by the board and the Prudential Regulation Authority total approximately US$387 million.
