Written by Stefania Spezzati and Ariane Ruti
LONDON (Reuters) – The U.S. Department of Labor says Swiss banks will continue to administer U.S. retirement plans after administrative errors put $11 billion in assets overseen by the financial institutions at risk. Documents reveal that the company has granted UBS the necessary exemption to do so.
After a five-month review, UBS announced in a notice released Wednesday that it can rely on UBS’s status as a qualified professional asset manager in the United States until June 2029.
The exemption, first reported by Reuters, is retroactive and will apply from June 2023, when the bank acquired failed rival Credit Suisse.
UBS needs the exemption to serve U.S. pensioners because it has been convicted in France in recent years of crimes including market rigging and tax evasion.
The agency said UBS teams operating in the U.S. pension market remain separate from the convicted UBS and Credit Suisse entities and should be trusted to protect their assets.
UBS has been operating under an exemption since 2013, but after the Credit Suisse merger, it will receive a new merger exemption on the condition that it meets certain conditions, such as submitting an audit report by January 2024. I was told that there is a possibility of getting it.
UBS missed the deadline, according to a notice included in hundreds of pages of documents reviewed by Reuters.
The letter said UBS was informed by the ministry in early 2024 that the bank appeared to have lost its waiver.
However, communications between the bank and U.S. authorities since July indicate that it took several months for the error to be corrected.
This episode provides a glimpse into the huge challenges facing UBS in its combination of Credit Suisse, the biggest banking merger since the 2008 global financial crisis, and the red tape and regulatory authorities that UBS will need to obtain and maintain. This highlights the minefield of approval.
Now that the deadline has passed, UBS has made adjustments to its U.S. compliance team, including appointing a second compliance officer to oversee the waiver process, according to a July 29 letter from UBS’s legal representative to the U.S. government agency. He says he was forced to do so.
UBS said in the letter that it “deeply regrets the oversight” and called the delay “unacceptable”, but noted that the Credit Suisse merger had been “the subject of intense and rigorous efforts”. He also said that “without the exemption, many customers will leave UBS.”
A UBS spokesperson declined to comment. Representatives from the U.S. Department of Labor did not respond to requests for comment.
The failure put UBS at risk of losing a key part of the bank’s wealth management business, which manages more than $11 billion.
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Without a waiver, “UBS will likely be forced to exit its planned asset management business,” the bank’s law firm told U.S. authorities in late July.
The bank had estimated at least $90 million in customer liquidation costs.
The bank said it took “hundreds of hours” to review more than 16,000 transactions since June 2023, with a group of 300 to 400 loans not eligible for alternative forgiveness. .
The size of the loan was not estimated, according to the July 29 communication.
A group of activists is campaigning to have UBS banned from the US pension market, citing “serious financial crimes” by the group, according to a filing with a US government agency and reported by Reuters. This was revealed in a confirmed letter.
Activists claimed the bank’s application contained “numerous factual errors” and asked the bank to hold a public hearing, but the request was denied.
(Reporting by Stefania Spezzati and Ariane Luthi; Editing by Elisa Martinuzzi and Tomasz Janowski)
