UBS shares plunge as the bank faces widening probe by the US

UBS shares plunge as the bank faces widening probe by the US

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UBS.(photo:UBS twitter)

London, Sep 27 (IANS) Shares of UBS plunged on Wednesday following a Bloomberg report that the Swiss bank faces a widening probe by the US Department of Justice (DoJ) over suspected compliance failures that allowed Russian clients to evade sactions, a media report said.

The Swiss Stock Exchange said it had temporarily stopped trade in the stock, which had fallen as much as 8% before it was suspended, CNN reported.

Trading resumed later and shares stood about 3.5 per cent lower by the early afternoon in Zurich.

Citing people familiar with the matter, Bloomberg reported that what began as a probe into several banks turned into a full-scale investigation focusing on Credit Suisse, which was bought by UBS earlier this year in an emergency rescue deal, CNN reported.

UBS has seen its shares gain 30 per cent since the takeover was announced on March 19.

But news of the probe could renew investor concerns about the lender’s exposure to Credit Suisse’s legal woes and compliance failures, which ultimately played a key role in destroying clients’ confidence in the bank.

The DoJ has briefed lawyers for UBS, which absorbed its smaller rival in June, about Credit Suisse’s alleged involvement in sanctions violations, according to Bloomberg. Authorities are also looking into possible compliance failures at UBS.

In its latest earnings statement in August, UBS said Credit Suisse offices in various locations, including the United Kingdom, the Netherlands, France and Belgium, had been contacted by regulatory and law enforcement authorities seeking information in relation to investigations into cross-border private banking services, CNN reported.

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