Finance

CFPB sues Capital One, alleges it misled consumers on savings rates

Published

5 months ago

January 14, 2025

Business Finance News

Capital One headquarters in McLean, Virginia on February 20, 2024.

Brendan Smialowski | AFP | Getty Images

The Consumer Financial Protection Bureau announced Tuesday that it was suing Capital One for misleading consumers about their savings account interest rates and “cheating” them out of more than $2 billion in interest.

The agency said in a statement Capital One deceived holders of its “360 Savings” account by conflating it with its newer and higher-yield savings account option, the “360 Performance Savings” account. The bank allegedly failed to notify 360 Savings account holders of the newer option and marketed the two products similarly to lead customers to believe they were the same.

However, the interest rates of the two options were substantially different, according to the CFPB. Capital One increased the 360 Performance Savings interest rate from 0.4% in April 2022 to 4.35% in January 2024, while it lowered and then froze the 360 Savings rate at 0.3% between late 2019 to mid-2024, the agency said.

Despite its relatively low interest rate, the CFPB alleged, the 360 Savings account was advertised as a high-interest savings account. The bureau said Capital One aimed to keep 360 Savings users in the dark about the higher-yield option by replacing all references to the account with the similarly named 360 Performance Savings option on its website, excluding account holders from marketing campaigns advertising the higher-yield account and forbidding employees from notifying account holders about the 360 Performance Savings option.

“The CFPB is suing Capital One for cheating families out of billions of dollars on their savings accounts,” said CFPB Director Rohit Chopra in a news release. “Banks should not be baiting people with promises they can’t live up to.”

In a statement, Capital One denied the allegations and said it transparently marketed its 360 Performance Savings account.

“We are deeply disappointed to see the CFPB continue its recent pattern of filing eleventh hour lawsuits ahead of a change in administration. We strongly disagree with their claims and will vigorously defend ourselves in court,” the company said in a statement.

The bank added the 360 Performance Savings product was “marketed widely, including on national television, with the simplest and most transparent terms in the industry.”

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Finance

Swiss government proposes tough new capital rules in major blow to UBS

Published

23 hours ago

June 6, 2025

Business Finance News

A sign in German that reads “part of the UBS group” in Basel on May 5, 2025.

Fabrice Coffrini | AFP | Getty Images

The Swiss government on Friday proposed strict new capital rules that would require banking giant UBS to hold an additional $26 billion in core capital, following its 2023 takeover of stricken rival Credit Suisse.

The measures would also mean that UBS will need to fully capitalize its foreign units and carry out fewer share buybacks.

“The rise in the going-concern requirement needs to be met with up to USD 26 billion of CET1 capital, to allow the AT1 bond holdings to be reduced by around USD 8 billion,” the government said in a Friday statement, referring to UBS’ holding of Additional Tier 1 (AT1) bonds.

The Swiss National Bank said it supported the measures from the government as they will “significantly strengthen” UBS’ resilience.

“As well as reducing the likelihood of a large systemically important bank such as UBS getting into financial distress, this measure also increases a bank’s room for manoeuvre to stabilise itself in a crisis through its own efforts. This makes it less likely that UBS has to be bailed out by the government in the event of a crisis,” SNB said in a Friday statement.

‘Too big to fail’

UBS has been battling the specter of tighter capital rules since acquiring the country’s second-largest bank at a cut-price following years of strategic errors, mismanagement and scandals at Credit Suisse.

The shock demise of the banking giant also brought Swiss financial regulator FINMA under fire for its perceived scarce supervision of the bank and the ultimate timing of its intervention.

Swiss regulators argue that UBS must have stronger capital requirements to safeguard the national economy and financial system, given the bank’s balance topped $1.7 trillion in 2023, roughly double the projected Swiss economic output of last year. UBS insists it is not “too big to fail” and that the additional capital requirements — set to drain its cash liquidity — will impact the bank’s competitiveness.

At the heart of the standoff are pressing concerns over UBS’ ability to buffer any prospective losses at its foreign units, where it has, until now, had the duty to back 60% of capital with capital at the parent bank.

Higher capital requirements can whittle down a bank’s balance sheet and credit supply by bolstering a lender’s funding costs and choking off their willingness to lend — as well as waning their appetite for risk. For shareholders, of note will be the potential impact on discretionary funds available for distribution, including dividends, share buybacks and bonus payments.

“While winding down Credit Suisse’s legacy businesses should free up capital and reduce costs for UBS, much of these gains could be absorbed by stricter regulatory demands,” Johann Scholtz, senior equity analyst at Morningstar, said in a note preceding the FINMA announcement.

“Such measures may place UBS’s capital requirements well above those faced by rivals in the United States, putting pressure on returns and reducing prospects for narrowing its long-term valuation gap. Even its long-standing premium rating relative to the European banking sector has recently evaporated.”

The prospect of stringent Swiss capital rules and UBS’ extensive U.S. presence through its core global wealth management division comes as White House trade tariffs already weigh on the bank’s fortunes. In a dramatic twist, the bank lost its crown as continental Europe’s most valuable lender by market capitalization to Spanish giant Santander in mid-April.