UBS shares took a hit on Wednesday following a report that the US Department of Justice (DOJ) is intensifying its investigation into alleged compliance failures that allowed Russian clients to evade sanctions. The report stated that the DOJ is conducting a full-scale investigation into Credit Suisse, which was acquired by UBS earlier this year. UBS had declined to comment on the matter. However, in its latest financial report, UBS stated that its sanctions programs are designed to comply with sanctions across various jurisdictions, including those imposed by the US. Trading in UBS shares was temporarily halted after the news broke, but later recovered to trade 3.3% lower.

The DOJ investigation is focusing on Credit Suisse’s alleged exposure to sanctions violations after its acquisition by UBS. The investigation is said to be in its early stages and may not result in charges or a settlement. UBS had built sufficient provisions to handle any costs arising from the case, with litigation provisions of $4.7 billion at the end of June. JP Morgan noted that the DOJ investigation posed a challenge for UBS but believed that the bank was adequately prepared. UBS has also adjusted its valuation of Credit Suisse by $3 billion to account for potential outflows related to legal proceedings.

UBS’s shares fell following the news of the DOJ investigation, but later recovered somewhat. The investigation is seen as a headwind for the bank, but UBS has made provisions to cover potential costs.

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