UBS Receives Huge Fine in Hong Kong
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UBS has to pay a huge fine in Hong Kong because it overcharged its clients. Only one other major bank had to pay a similar amount ever.
UBS had warned in the last quarterly report that authorities in Hong Kong and Singapore investigated the bank. The cause of the probe were its fees charged between 2008 and 2015 for bond transactions from Asian clients.
UBS has now received the bill from Hong Kong: the Swiss bank has to pay HK$400 million – roughly 51 million Swiss francs. The financial market regulator in Hong Kong concluded that the Swiss bank had overcharged some 5,000 clients over the course of almost a decade.
The control mechanism of the bank had failed in a serious systemic fashion, the regulator said. UBS is ready to pay clients damages to the tune of about HK$25 million in addition to the fine.
The fine is the highest paid by a bank in Hong Kong ever. In 2017, HSBC had to pay HK$400 million for the distribution of Lehman Brothers securities.It is also the second fine for the Swiss bank in Hong Kong this year. In spring, the regulator had fined it 47 million francs and banned it from IPOs for a year.
Questions & Answers
Q.What specifically caused UBS to be fined in Hong Kong?
What specifically caused UBS to be fined in Hong Kong?
The Hong Kong financial market regulator concluded that UBS had overcharged approximately 5,000 Asian clients on bond transaction fees between 2008 and 2015. The bank's control mechanisms were deemed to have failed systemically.
Q.Is this the first time UBS has been fined in Hong Kong this year?
Is this the first time UBS has been fined in Hong Kong this year?
No, this is the second fine for UBS in Hong Kong this year. In spring, the regulator fined the bank 47 million francs and banned it from participating in IPOs for a year.
Q.What action is UBS taking to compensate affected clients?
What action is UBS taking to compensate affected clients?
In addition to the HK$400 million fine, UBS is prepared to pay around HK$25 million in damages directly to the clients who were overcharged. This aims to cover the amounts lost by the affected individuals.
Q.How does the size of this fine compare to others levied on banks in Hong Kong?
How does the size of this fine compare to others levied on banks in Hong Kong?
The HK$400 million fine is the highest ever paid by a bank in Hong Kong. Only one other major bank has paid a similar amount, with HSBC paying HK$400 million in 2017 for Lehman Brothers securities distribution.