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Credit Suisse and UBS grappling with Russia’s grain

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Credit Suisse and UBS grappling with Russia’s grain

Not only Deutsche Bank: Credit Suisse and UBS are also protagonists today, the two Swiss banks united in marriage complete with the blessing of the Swiss government. Close to becoming a single banking entity, the two institutes ended up in the crosshairs of the US federal authorities, together with other banks, as they were suspected of having helped the Russian oligarchs to evade the sanctions imposed against Moscow for the invasion of Ukraine.

The investigation, reports an article in Bloomberg, was launched by the US Justice Department, which has not yet released any statement on the matter. The two banks allegedly involved, UBS and Credit Suisse, preferred not to comment, in a day of high tension on the markets.

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The Bloomberg article recalls the links between the two big Swiss banks with Vladimir Putin’s Russia. Before the launch of Western sanctions following the invasion of Ukraine on February 24, 2022, Credit Suisse was well known for providing various services to the Scrooge McDuck made in Russia. The bank has previously managed more than $60 billion of its Russian clients, which provided Credit Suisse with between $500 million and $600 million in annual revenue.

The war between Russia and Ukraine and the sanctions launched by the West forced Credit Suisse, in May 2022, to put a stop to the services hitherto provided to Russian oligarchs. At that time, Credit Suisse still held a whopping $33 billion belonging to its Russian clients, which was 50% more than the Russian deposits held by UBS. Considering that UBS’s wealth management division is larger than that of CS, the numbers give an idea of ​​how significant the institution’s exposure to Russia was.

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A big headache for UBS, which has decided to buy its run-down rival for 3 billion francs, and which now, in the wake of the investigation launched by the US authorities, will have to have an even more careful eye in checking the list of clients of the prey on Credit Suisse.

Bloomberg recalls that last year the US Justice Department launched the KleptoCapture task force with the aim of enforcing the sanctions passed against Russian oligarchs political allies of Russian President Vladimir Putin. Since then, the US government has seized several yachts, private planes and luxury properties belonging to Putin’s close wealthy friends. Just last month, Washington confiscated Russian oligarch Viktor Vekselberg’s properties in New York, Florida and the Hamptons.

The US and Western sanctions have also affected several individuals who have helped Russian oligarchs hide their assets, thus escaping confiscation. Among them is the name of British businessman Graham Bonham-Carter, who was arrested last October for helping Russian tycoon Oleg Deripaska dodge sanctions.

It is worth remembering that banks risk paying hefty fines if they violate US sanctions. In 2014, France’s BNP Paribas was forced to pay nearly $9 billion after mea culpa before US federal authorities after being charged with transactions launched on behalf of Sudanese, Iranian and Cuban companies that had been affected by the sanctions . In 2019, Standard Chartered Bank agreed to pay more than $1 billion to close an investigation launched by the Justice Department, which led a former employee to admit to conspiring to violate US-imposed sanctions against Iran .

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With the yes to the wedding with Credit Suisse, UBS has received a guarantee of $9 billion from the Swiss government, which in theory would shield it from any losses it could incur with the acquisition of its rival. However, Bloomberg recalls that those guarantees would become operational in the event of losses due to the devaluation of “difficult to value” assets. Not exactly related to any loans and favors made to Putin’s friends.

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Incidentally, the United States is more than determined to hunt down any entity that is protecting the Russian oligarchs. At the beginning of March, the deputy prosecutor Lisa Monaco confirmed that the Justice Department is responding to “an uncertain geopolitical context” by strengthening its national security division, which monitors in particular violations of the sanctions imposed. “Corporate crime and national security are overlapping as never before, and the department is retooling to meet these challenges.”

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