PRA imposes record fine of £87m on Credit Suisse for serious risk management and governance failures

The Prudential Regulation Authority has fined Credit Suisse (specifically Credit Suisse International (“CSI”) and Credit Suisse Securities (Europe) Ltd) £87 million for significant failures in risk management and governance between January 2020 and March 2021, in connection with the Firms’ exposures to Archegos Capital Management.  This is the only time a PRA enforcement has established breaches of four PRA Fundamental Rules - it is also notable as the PRAs highest ever fine.

The action is part of a coordinated global action, incorporating the Swiss Financial Market Supervisory Authority (“FINMA”) and the Federal Reserve Board, with combined penalties in excess of $387.5 million being imposed.  

“The Firms’ risk management oversight and practices fell well below the regulatory standards required. The failings were found to be symptomatic of an unsound risk culture within the business line that failed to balance considerations of risk against commercial reward appropriately.  Broadly, this resulted in a failure by the Firms to address the risk arising from Archegos’ portfolio, a confusion of responsibilities and failures to adequately respond when limit breaches were exceeded. The Firms had failed to learn from past similar experiences and had insufficiently addressed concerns previously raised by the PRA.”

As always, we’ve tried to step back from the specifics of the case so firm’s in any sector or of any size can take the opportunity to learn from these failings.

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