New York

The US Department of Justice (DOJ) has turned up the heat on Credit Suisse Group and UBS over suspicions that the compliance failures allowed Russian clients to evade sanctions, according to a Bloomberg report. 

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Citing sources familiar with the matter, the report stated that the DOJ had briefed US-based lawyers for UBS about Credit Suisse’s alleged exposure to sanctions violations since UBS acquired its smaller rival in June. 

"The probe is still at an early stage and may not result in charges or a settlement. Still, it comes at a delicate time for the Zurich-based bank, which is absorbing thousands of employees from Credit Suisse," the sources said. 

The DOJ has requested information about how banks handled the accounts of sanctioned clients but refrained from seeking interviews with the executives or the staff just yet. 

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Notably, Credit Suisse in its latest financial report admitted that its officers in Britain, Netherlands, France and Belgium, had been contacted by law enforcement officials as part of the probe. 

"Credit Suisse has conducted a review of these issues, the UK and French aspects of which have been closed, and is continuing to cooperate with the authorities," the bank said in its report.

After the news of DoJ stepping up its operations made headlines, UBS shares fell sharply on Wednesday. According to a Reuters report, trading was halted temporarily in UBS shares as they fell nearly eight per cent, before recovering to trade at 3.4 per cent lower. 

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Watch | UBS to begin layoffs at Credit Suisse next month

What happened with Credit Suisse and UBS?

After reports came in that Credit Suisse had collapsed earlier this year, the Swiss government stepped up and arranged a takeover by the UBS Group for $3.25 billion. The takeover was aimed at preventing economic turmoil from spreading throughout the country and beyond. 

Although UBS completed the takeover in June, it still needs approvals from regulators in markets where both the banks operate for the legal completion of the first rescue of a global bank since the 2008 financial crisis.

Also read | Over $17 billion worth of bonds become zero after Credit Suisse takeover by UBS

UBS has identified at least four countries, including India and South Korea where it is having a tough time getting regulatory approvals, an internal documents accessed by Reuters has revealed. 

Prepared by UBS after a global review to assess the timeline of regulatory approvals necessary for the integration of Credit Suisse to complete, the document said uncooperative regulators could put transactions such as the Swiss bank deal at risk.

(With inputs from agencies)

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