Risk is a noble thing but not this time. Financial regulators hold the opposite perspective, especially when it comes to banks. Thus, different views on risk management have resulted in a heavy fine for Credit Suisse.
The Swiss bank was ordered to pay more than $387 million to the US Federal Reserve and the Bank of England's Prudential Regulation Authority over its dealings with private investment firm Archegos Capital Management. The US and British regulators cited Credit Suisse’s significant failures in risk management and governance between 1 January 2020 and 31 March 2021.
"The Prudential Regulation Authority has fined Credit Suisse International and Credit Suisse Securities (Europe) Ltd £87 million <...> The PRA action is part of a co-ordinated global resolution ... which provides for combined penalties in excess of $387.5 million being imposed by the PRA and Federal Reserve Board," the BoE stated in a press release.
Unsecure and inappropriate practices to manage credit risks in relation to its former counterparty Archegos Capital Management was another blow to the reputation of Credit Suisse. Notably, in March, the bank’s stock collapsed by a quarter in a day amid a string of bank collapses in the United States. Later on, the central bank of Switzerland announced that UBS, the country's largest bank, would acquire Credit Suisse for 3 billion francs ($3.2 billion).