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Governor Pataki Joins Senator D'Amato To Oppose Swiss Banks Merger
- Hails NYS Banking Department's Opposition to the Merger of Swiss Bank & Union Bank -

March 24, 1998

Governor George E. Pataki today announced his support of Senator Alfonse D'Amato's opposition to the proposed merger between Swiss Bank Corporation (SBC) and Union Bank of Switzerland (UBS) and hailed the New York State Banking Department's decision to formally oppose this merger to the Federal Reserve. The Governor agrees that U.S. bank regulators should not approve the application until additional questions about the fate of dormant Holocaust-era accounts are answered.

"Before these two institutions are given the chance to launch a new era in their respective histories, they must convince New York's bank regulators and the Federal Reserve's Board of Governors that they're doing everything in their power to rectify a great injustice from the past," Governor Pataki said. "We have waited patiently for the last two years for these banks to cooperate and recognize the legitimate claims of Holocaust survivors and their heirs -- yet they have not been forthcoming.

"For too long, Holocaust survivors and their heirs have been stonewalled about the fate of money rightfully belonging to them and, while progress is being made, senior management at Swiss Bank Corporation and the Union Bank of Switzerland can do even more when it comes to combing their archives for relevant records and returning deposits to their owners," the Governor said.

In a letter to Federal Reserve Chairman Alan Greenspan, Acting Superintendent of the New York State Banking Department Elizabeth McCaul wrote, "We emphasize to prospective foreign bank applicants that a license (or a charter, in the case of a subsidiary), is a privilege, not a right... While the Department oversees some of the most sophisticated and complex banking operations in world, our first and most important concern is to protect depositors who have entrusted their money to a New York bank or a New York branch of a foreign bank. In evaluating the SBC-UBS merger, substantial concern for depositors is justified.

"The home office's seemingly inattentive regard for the depositors who fell victim to the Holocaust, or their heirs, who have never received funds to which they are entitled, raises regulatory questions about the character and fitness of these banks' privilege to maintain operations in the United States," Acting Superintendent McCaul said.

The New York State Banking Department licenses and regulates the New York foreign branches of Swiss Bank Corporation and the Union Bank of Switzerland. However, the Federal Reserve System's Board of Governors must approve foreign banks' merger proposals because applications such as these impact their operations throughout the United States.

The Federal Reserve, as part of their due diligence, sought the New York State Banking Department's input on the merger application with respect to the investigation it launched more than a year ago into the fate of assets deposited with Swiss financial institutions by victims of the Holocaust between 1933 and 1945. In connection with that investigation, in December 1997, the Banking Department entered into a Consent Order with Swiss Bank Corporation's New York branch. As part of the Consent Order, SBC was required to conduct an overhaul of its entire approach to the search for Holocaust-era dormant accounts.

Although Swiss Bank Corporation has made recent improvements in their approach to resolving Holocaust claims, Union Bank of Switzerland has been lax in retrieving records, but more importantly, there is overwhelming evidence that both institutions have failed to turn over assets that belonged to individuals.

Acting Superintendent McCaul said in her letter, "I do not believe that the proposed merger should be approved unless and until both SBC and UBS give the deposits back to their rightful owners and heirs."