UBS has agreed to pay $388 million in fines to UK and US regulators over misconduct by Credit Suisse towards its former counterparty Archegos Capital Management.

Now a subsidiary of UBS, the Swiss bank said in a statement that Credit Suisse would pay the US Federal Reserve $269 million and $119 million to the Bank of England.

The Federal Reserve said the fine related to misconduct involving Credit Suisse's “unsafe and unsound” counterparty credit risk management practices with its former counterparty, Archegos Capital Management, adding that Credit Suisse “failed to adequately manage” the risk posed by Archegos despite repeated warnings.

The payout is the first legal issue UBS has dealt with since concluding the acquisition of its failed rival in June, which also meant UBS inherited any of Credit Suisse’s ongoing legal disputes.

According to Reuters, ahead of its takeover, UBS said it was setting aside $4 billion to address any potential lawsuits connected to Credit Suisse.

UBS acquired Credit Suisse after its share price plummeted by 20 per cent following the collapse of Silicon Valley Bank (SVB) in March.

The collapse of SVB intensified an ongoing “crisis of confidence” at Credit Suisse which at the time was being investigated by the Securities and Exchange Commission after “material weaknesses” were found in its financial reporting processes.

UBS takeover deal was brokered by Swiss Financial Market Supervisory Authority FINMA, which said at the time there was a risk of Credit Suisse “becoming illiquid, even if it remained solvent” and concluded it was necessary for authorities to step in and take action to avoid “serious damage to the Swiss and international financial markets.”

Share Story: