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Swiss Bank Corporation Signs Consent Order With Banking Department

The New York State Banking Department took regulatory action late Friday night, Dec. 5 through the issuance of a Consent Order against the Swiss Bank Corporation, Basle, Switzerland and the Swiss Bank Corporation's New York branch, New York, NY. Swiss Bank Corporation and its New York branch agreed to the terms of the regulatory action and will take corrective measures to comply with the Order.

The Consent Order, which was released publicly via the Public Information Office, follows, as does a press release issued yesterday (Sunday, Dec. 7) by Governor Pataki's Office ('Governor Applauds Regulatory Action Against Swiss Bank Corp.).

Consent Order Entered Into Pursuant to Section 39 In the Matter of


WHEREAS, Swiss Bank Corporation's New York Branch ("SBCNY"), a licensed branch of Swiss Bank Corporation ("SBC") (together, the "Bank") and the New York State Banking Department (the "Department") agreed, pursuant to an engagement letter dated April 17, 1997 (the "Agreement"), that the accounting firm of Ernst & Young ("E&Y") would promptly undertake a review of SBCNY's records, and identify and report to the Superintendent of Banks of the State of New York (the "Superintendent") its findings regarding the Bank's assets and accounts maintained in New York during the period 1933-1945 (the "Wartime" period), including the inflows to and outflows from New York of such assets; with a particular view to establishing the existence and/or ultimate disposition of assets held by the Bank belonging to victims of the Holocaust; and

WHEREAS, by letters dated January 16, 1997 and February 14, 1997, the Department informed SBCNY of the commencement of a review of the Bank's Wartime period business activities in New York State and made several documentary and procedural requests of SBCNY; and

WHEREAS, in connection with the goals described above, it is the Department's opinion that the Bank has not acted with appropriate speed and diligence in responding to requests for information that would assist in determining the existence of Wartime records relating to the assets and accounts held in New York by the Bank; has not provided E&Y with certain relevant records and documents; has provided inaccurate responses to inquiries concerning Wartime accounts; and has failed to supervise adequately the performance of the Agreement; and

WHEREAS, the Superintendent possesses the authority under Section 39 of the New York Banking Law to remediate the foregoing; and

WHEREAS, the Superintendent believes that action is necessary to identify, as promptly as possible, all records of SBC that relate to assets and accounts maintained in New York during the Wartime period belonging to victims of the Holocaust;

NOW, THEREFORE, the Superintendent, SBC and SBCNY hereby mutually agree, without such agreement constituting an admission by SBC or SBCNY of any allegation made or implied by the Superintendent or by the Department, as follows:

1. SBCNY will immediately initiate a thorough review of, and submit to the Department and the Bank's Executive Board or a designated committee thereof, or such other governing body as shall be acceptable to the Superintendent (the "Board"), a written report with recommended improvements on, SBCNY's record retention and retrieval practices relating to the Bank's Wartime records (including policies and procedures and management oversight of such processes). At a minimum, such report will address, consider and include the following:

(a) Number and qualifications of SBCNY personnel devoted to such record retention and retrieval, and the management oversight thereof.

(b) Policies and procedures relating to marking, organizing, archiving and storing records;

(c) Data systems used for inventorying and tracking location and status of records;

(d) Retrieval methods employed to obtain specific stored data, including personnel utilized, database or physical file searches and description of speed of process;

(e) Effectiveness of SBCNY's current system for handling inquiries regarding status of particular Wartime accounts.

(f) The extent to which any recommended improvements relating to keeping of the Bank's Wartime records may have general applicability to SBCNY's overall recordkeeping systems.

2. Within 15 days of the submission of such report to the Board and the Department, SBCNY will develop and submit to the Board a comprehensive written plan, with specific time frames for action to be taken, if determinable, that will implement the recommended improvements to its record retention and retrieval practices, which improvements will include a system for effectively and quickly responding to inquiries concerning Wartime accounts and, if necessary, the hiring of additional personnel dedicated to such efforts. The Board will act upon such plan within 15 days of submission of such plan to the Board, and SBCNY, within 5 days of the approval of such plan by the Board, will submit such plan to the Department. In addition, SBCNY will submit monthly progress reports to the Board and the Department.

3. In the absence of any objections from the Department within 15 days of receipt by the Department of the plan required under paragraph 2, SBCNY will implement such plan. As long as this Order remains in effect, SBCNY shall notify the Department of any material amendments to such plan within 15 days of the adoption of such amendments.

4. Each provision of this Order will remain effective until stayed, modified, terminated or suspended in writing by the Department. Until such time as this Order shall be terminated, SBCNY shall be obligated to make available to the Department on a continuing basis, in New York or such other site as the Department shall agree, any and all of its records and personnel as may be necessary to evaluate compliance with the terms of this Order.

5. SBCNY shall take such prompt action as may be necessary to ensure its full compliance with this Order, including, without limitation, where appropriate, adoption by the Board of specific policies to address the requirements of this Order.

6. Without limiting the terms of this Order, SBCNY shall promptly make available to the Department, upon request, records or reports which evidence its actions taken to comply with the terms of this Order.

7. The provisions of this Order will not bar, estop, or otherwise prevent the Department from taking any other action within its authority affecting the Bank.

8. All communications regarding this Order shall be sent to:

(a) Mr. Daniel Muccia Deputy Superintendent of Banks New York State Banking Department Two Rector Street, New York, NY 10006

(b) Mr. Simon Canning President and Chief Executive Officer SBC Warburg Dillon Read Inc. 277 Park Avenue - 3rd floor New York, NY 10172

9. This Order shall become effective upon execution by the Superintendent.


New York State Banking Department

By: ______________________________ Elizabeth McCaul Acting Superintendent of Banks

Date: __________________________




By: _______________________ By: ________________________ Marcel Ospel Michael Daly Title: Chief Executive Officer Title: Managing Director/New York Branch Manager

Date: ____________________ Date: ______________________


By: ________________________ Simon Canning Title: President & Chief Executive Officer

Date: ______________________

The Governor's Press Office issued the following release in the early afternoon on Sunday, Dec. 7.


Governor George E. Pataki today applauded the New York State Banking Department for taking enforcement action against Swiss Bank Corporation (SBC) after learning that the financial institution was not fully cooperating with the Department's requests for documents pertaining to SBC's New York activities prior to, and during, the Second World War.

"New York State is taking a leading role in the worldwide fight to return Holocaust-era assets to their rightful owners," Governor Pataki stated. "Given the international focus on this issue, it is extremely disturbing that any institution would be less than fully cooperative. I am pleased that Swiss Bank Corporation has signed a consent order with the Department to take steps to cooperate with the search for Holocaust-era assets."

In January 1997, the New York State Banking Department asked SBC and Credit Suisse to furnish the Department with an accounting of their New York activities in the 1930's and 1940's, years in which assets were transferred to the United States from their respective home offices in Switzerland. Those two Swiss institutions were the only Swiss banks conducting business in New York through their own branches during that time period.

During World War II, the threat of a German invasion resulted in all of the wealth of Switzerland being transferred to New York for safekeeping, according to many historians and investigators who are currently pursuing the matter. Through the years, Holocaust survivors and their heirs have sought a full accounting of these assets, usually without success and with little cooperation from Swiss banking institutions.

"Governor Pataki's decision to launch and fund the Department's Holocaust Claims Processing Office (HCPO) demonstrates his commitment to obtaining a full accounting of all dormant Swiss bank accounts from this era," Acting Superintendent of Banks Elizabeth McCaul said. "The Banking Department hopes that no further regulatory will be needed to ensure the cooperation of Swiss banks."

The Banking Department's enforcement action against Swiss Bank Corporation will compel the bank to: --Initiate a comprehensive review of its archival holdings and expeditiously identify and report to the New York State Banking Department what relevant records are still in its possession; --Develop an effective system for responding to inquiries from the public as well as the Banking Department concerning wartime accounts; and --Take all necessary steps to fully cooperate with the Banking Department in its investigation in to the fate of assets belonging to Holocaust victims or their heirs.

In the meantime, the Department's investigation into the activities of Swiss Bank Corporation and Credit Suisse in New York prior to, and during, the Second World War continues. Holocaust survivors and their heirs who believe they have a legitimate claim against a Swiss bank or a European insurance company are welcome to contact the New York State Banking Department's Holocaust Claims Processing via its toll-free number: 1-800-695-3318. The office is situated in lower Manhattan at 2 Rector Street, New York, NY 10006.


Department of Financial Services


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