Shares of UBS fell on Wednesday after Bloomberg said that the US Department of Justice (DOJ) is expanding its investigation into the Swiss bank over possible compliance failures that let Russian clients get around sanctions.
The Swiss Stock Exchange said it had briefly stopped trading in the stock, which had dropped as much as 8% before it was stopped. After a break, trading started again, and by early afternoon in Zurich, shares were down about 3.5%.
Bloomberg reported that what started as an investigation into several banks turned into a full-scale investigation focused on Credit Suisse, which was bought by UBS in an emergency rescue deal earlier this year.
Since March 19, when the deal was announced, UBS’s shares have gone up 30%.
But hearing about the investigation could make investors worry again about the lender’s exposure to Credit Suisse’s legal problems and failures to follow the law, which were a big part of why clients lost faith in the bank in the end.
Bloomberg says that the DOJ has told lawyers for UBS (UBS), which bought its smaller peer in June, about how Credit Suisse may have broken sanctions. Authorities are also looking into whether UBS broke any rules.
UBS didn’t want to say anything. CNN has been in touch with the DOJ.
In its most recent earnings report, which was released in August, UBS said that regulatory and law enforcement agencies had contacted Credit Suisse offices in the UK, the Netherlands, France, and Belgium to find out more about investigations into cross-border private banking services.
By helping Credit Suisse, UBS took on a bank that was in bad shape.
Swiss taxpayers were at first responsible for any losses that might come from the deal. However, UBS said last month that it would no longer need a government guarantee of 9 billion francs ($10.3 billion) for any possible losses that might come from Credit Suisse in the future.
The move showed that the assets might not be as bad as UBS thought.
Still, Credit Suisse’s bad shape makes it very hard for UBS to pull off a first-of-its-kind merger of two global banks with nearly $1.7 trillion in assets between them.
UBS chairman Colm Kelleher has said that it will take three to four years for the businesses to be fully integrated. He has also said that joining the lenders comes with “huge” risks.