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UBS, Credit Suisse Banned From Russia Subsidiary Disposals
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UBS Group AG (UBS - Free Report) and recently-acquired Credit Suisse have been banned by a Moscow court from disposing of shares in their Russian subsidiaries. The ban follows an application made by Zenit Bank related to its concern about losing out if UBS and Credit Suisse exit Russia. The news was reported by Reuters.
In a statement to the Russian court, Zenit Bank said that it believed the Russian subsidiaries of UBS and Credit Suisse were preparing to terminate their activities in Russia. If true, it would leave Zenit Bank at risk of a loss relating to a loan made in October 2021.
Court documents showed that the Russian bank joined an agreement to provide a syndicated loan to Luxembourg-based agricultural firm, Intergrain, for which Credit Suisse was the credit agent.
In November 2021, Zenit Bank transferred $20 million to Intergrain. However, after Western sanctions were imposed on Zenit Bank, Credit Suisse notified the Russian bank that it would not transfer payments to it from Intergrain.
Documents showed that Zenit Bank filed for interim measures, asking the court to seize funds belonging to UBS and Credit Suisse and prohibiting the disposal of shares.
Notably, Zenit Bank’s request to seize funds was not granted and a further court hearing is scheduled for Sep 14.
Since the emergency takeover of Credit Suisse, UBS has been facing legal hassles and operational challenges. However, the company is focused on efficiency programs to support its financials. Additionally, a strong capital position and opportunistic expansion strategies will likely continue to aid profitability.
Shares of UBS Group have gained 6.7% on the NYSE over the past six months against the industry’s decline of 1.8%.
Bank of America (BAC - Free Report) has been hit with substantial financial penalties that amount to $250 million. This includes $100 million in customer reimbursements and $150 million in fines due to a trio of unsavory practices involving overdraft fees, withholding credit card rewards and opening unauthorized accounts.
The Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency levied this colossal fine after BAC's actions were deemed illegal and a detriment to customer trust. The bank must refund $100 million to affected customers and pay $90 million to the CFPB and $60 million to the OCC.
Wells Fargo & Company (WFC - Free Report) agreed to pay $1 billion related to a lawsuit accusing it of overstating the progress on resolving its 2016 fake account scandal and thereby defrauding shareholders. Since 2018, WFC has been under consent orders from the Federal Reserve and two other financial regulators to improve its governance and oversight.
However, shareholders alleged that Wells Fargo and its past management misinformed them about how swiftly the company was addressing the governance issues and risk-management systems due to which the bank opened millions of fake accounts. Accordingly, when these shortcomings surfaced, WFC's market value fell by more than $54 billion over two years ending in March 2020.
However, Wells Fargo denied any wrongdoing and decided to settle to eliminate further litigation expenses.
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UBS, Credit Suisse Banned From Russia Subsidiary Disposals
UBS Group AG (UBS - Free Report) and recently-acquired Credit Suisse have been banned by a Moscow court from disposing of shares in their Russian subsidiaries. The ban follows an application made by Zenit Bank related to its concern about losing out if UBS and Credit Suisse exit Russia. The news was reported by Reuters.
In a statement to the Russian court, Zenit Bank said that it believed the Russian subsidiaries of UBS and Credit Suisse were preparing to terminate their activities in Russia. If true, it would leave Zenit Bank at risk of a loss relating to a loan made in October 2021.
Court documents showed that the Russian bank joined an agreement to provide a syndicated loan to Luxembourg-based agricultural firm, Intergrain, for which Credit Suisse was the credit agent.
In November 2021, Zenit Bank transferred $20 million to Intergrain. However, after Western sanctions were imposed on Zenit Bank, Credit Suisse notified the Russian bank that it would not transfer payments to it from Intergrain.
Documents showed that Zenit Bank filed for interim measures, asking the court to seize funds belonging to UBS and Credit Suisse and prohibiting the disposal of shares.
Notably, Zenit Bank’s request to seize funds was not granted and a further court hearing is scheduled for Sep 14.
Since the emergency takeover of Credit Suisse, UBS has been facing legal hassles and operational challenges. However, the company is focused on efficiency programs to support its financials. Additionally, a strong capital position and opportunistic expansion strategies will likely continue to aid profitability.
Shares of UBS Group have gained 6.7% on the NYSE over the past six months against the industry’s decline of 1.8%.
Image Source: Zacks Investment Research
Currently, UBS carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Legal Hassles Faced by U.S. Firms
Bank of America (BAC - Free Report) has been hit with substantial financial penalties that amount to $250 million. This includes $100 million in customer reimbursements and $150 million in fines due to a trio of unsavory practices involving overdraft fees, withholding credit card rewards and opening unauthorized accounts.
The Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency levied this colossal fine after BAC's actions were deemed illegal and a detriment to customer trust. The bank must refund $100 million to affected customers and pay $90 million to the CFPB and $60 million to the OCC.
Wells Fargo & Company (WFC - Free Report) agreed to pay $1 billion related to a lawsuit accusing it of overstating the progress on resolving its 2016 fake account scandal and thereby defrauding shareholders. Since 2018, WFC has been under consent orders from the Federal Reserve and two other financial regulators to improve its governance and oversight.
However, shareholders alleged that Wells Fargo and its past management misinformed them about how swiftly the company was addressing the governance issues and risk-management systems due to which the bank opened millions of fake accounts. Accordingly, when these shortcomings surfaced, WFC's market value fell by more than $54 billion over two years ending in March 2020.
However, Wells Fargo denied any wrongdoing and decided to settle to eliminate further litigation expenses.