he Bank of England’s regulatory arm has handed out the biggest fine in its history to Credit Suisse for its ties to a collapsed fund whose founder has been accused of fraud and racketeering in the US.
The Prudential Regulation Authority (PRA) said the bank would have to pay £87 million, after the first investigation to establish breaches of its “fundamental rules”.
The fine was reduced from £124.4 million because the firm agreed to resolve the issue rather than fight it, the PRA said.
It found that Credit Suisse International and Credit Suisse Securities (Europe) had “an unsound risk culture” and failed to balance the risks and rewards of its actions appropriately.
When asset manager Archegos collapsed in early 2021 the two companies had losses of around 5.1 billion (£4 billion) booked to them, the PRA said.
“Credit Suisse’s failures to manage risks effectively were extremely serious, and created a major threat to the safety and soundness of the firms,” said PRA chief executive Sam Woods.
“The seriousness and widespread nature of those failures has led to today’s fine, which is the largest ever imposed by the PRA.”
The fine is part of international action taken by regulators in the US, the UK and Switzerland which has resulted in penalties of more than 387.5 million dollars (£302 million).
The companies failed to evaluate and take into account risks from their exposure to Archegos, escalate risks and put mitigations in place, the PRA said.
The Archegos case was one of several problems faced by Credit Suisse over recent years. Earlier in 2023 the business came close to failing and was taken over by Swiss rival UBS.
On Monday UBS said: “The Federal Reserve and (Swiss regulator) FINMA have imposed remedial requirements relating to credit, liquidity and non-financial risk management, as well as oversight of remedial efforts.
“UBS will implement its operational and risk management discipline and its culture across the combined organisation.
“It has already begun implementing its risk framework, including actions addressing these regulatory findings, across Credit Suisse.
“UBS intends to resolve Credit Suisse’s outstanding litigation and regulatory matters in the best interest of its stakeholders, including investors, clients and employees.”