Press Release

New York State Banking Department Signs Consent Order With Union Bank of Switzerland and Its New York Branch

The New York State Banking Department publicly released tonight the Consent Order it signed on Monday, April 6 with the Union Bank of Switzerland and its New York branch. A copy of the press release and the text of the Consent Order follow:

New York, April 8, 1998...The New York State Banking Department took regulatory action earlier this week through the issuance of a Consent Order against the Union Bank of Switzerland (UBS), Zurich, Switzerland and the Union Bank of Switzerland's New York branch, New York, New York. UBS and its New York branch agreed to the terms of the regulatory action and will take corrective measures to comply with the Order.

A copy of the Consent Order is attached.

WHEREAS, in December 1996, the New York State Banking Department (the "Department") informed Union Bank of Switzerland, Zurich, Switzerland ("UBS") and Union Bank of Switzerland, New York Branch ("UBSNY") (together, the "Bank") that the Department was conducting an investigation into the activities of Swiss banks in New York State prior to and during the Second World War (the "Wartime" period), with a particular view to establishing the existence and/or ultimate disposition of assets held by Swiss banks belonging to victims of the Holocaust, and, in connection with such investigation, the Department requested the Bank to identify and provide to the Department all records in its possession and control relevant to such investigation; and

WHEREAS, pursuant to an agreement dated February 21, 1997 between the Department and the Swiss Federal Banking Commission, UBS was obligated to make available and provide to the Department all records of UBS relating to its business activities in New York during the Wartime period; and

WHEREAS, by letters dated February 4, 1997 and February 21, 1997, the Department requested the Bank to provide any records relating to its Wartime business activities in New York; and

WHEREAS, the Bank has failed to produce information concerning Wartime records relating to business activities in New York on a timely and accurate basis, including information as to the existence and activities of Union American Corporation, which was a corporation established for the purpose of safeguarding Bank customers’ assets; and

WHEREAS, the Bank has failed to cooperate in material respects with the Department’s Holocaust Claims Processing Office ("HCPO") in attempting to resolve claims filed relating to assets that may have been held at the Bank, and has not produced requested documentation in a timely manner, causing undue delay in resolving Holocaust claims; and

WHEREAS, prior to March 17, 1998, the Bank responded in a perfunctory manner to requests by the HCPO for documentation, which responses created a misimpression as to the possible existence of Wartime records; and

WHEREAS, the Bank’s actions concerning production of documentation relating to a Holocaust victim’s account, including its failure to produce account documentation in a timely manner and to explain certain account activity in a satisfactory manner, are evidence of an inadequate process at the Bank; and

WHEREAS, the Bank’s conduct taken as a whole has impaired the Department’s regulatory investigation and has interfered with the Department’s ability to supervise the Bank appropriately as it relates to the subject matter of the Department’s investigation; and

WHEREAS, the foregoing evidence that the Bank has not dedicated sufficient management oversight and resources to ensuring the production of Wartime records and resolution of Wartime account inquiries; and

WHEREAS, overseeing the integrity of the receipt, investment and safe and timely return to customers of their bank deposits is the most fundamental mission of the Department, and the Superintendent possesses the authority under Section 39 of the New York Banking Law to remediate any activities inconsistent with such objectives; and

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

WHEREAS, the Superintendent believes that action is necessary to ensure that adequate management and policies and procedures are adopted by the Bank to ensure that the Bank can and will comply with its written and oral assurances that it will cooperate with the Department’s investigation;

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

1. Within 20 days of the date of this Order, UBSNY will engage an independent accounting or consulting firm (the "Consulting Firm") acceptable to the Department (the "Engagement") to investigate, inventory, catalog and review all documents in the possession of the Bank or its affiliates or agents relating to the transfer of assets held by the Bank to New York during the Wartime period. Such documents to be reviewed shall also include those relating to the activities of any Bank affiliates or subsidiaries, including, but not limited to, Union American Corporation. The terms of the Engagement, as well as the personnel assigned to perform under the Engagement, shall be agreed to and accepted by the Department, and the Department shall have the right to be a party to the Engagement.
   
2. Within 20 days of the date of this Order, the Bank will assemble and dedicate sufficient and qualified staff to handle the day-to-day operations relating to working with the Consulting Firm to review, inventory and catalog all Wartime-related documentation, as well as relating to working with the HCPO in expeditiously resolving claims filed to recover Wartime assets held by the Bank. The staff assembled by the Bank shall include an effective management and reporting structure acceptable to the Department, as well as the hiring of an individual with sufficient management and logistical experience to be responsible for overseeing the coordination of the entire operation.
   
3. Within 30 days after the engagement of the Consulting Firm, UBSNY will submit to the Department the first of a series of monthly reports to be prepared jointly with the Consulting Firm describing the actions taken and the general status of the document review and cataloguing process, as well as of the handling of Wartime-account inquiries and claims.
   
4. The Bank shall cooperate and respond in a diligent and expeditious manner to all HCPO inquiries and requests for documents relating to Wartime account inquiries.
   
5. 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, the Bank 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.
   
6. The Bank shall take such prompt action as may be necessary to ensure its full compliance with this Order, including, without limitation, where appropriate, adoption by its board of directors of specific policies to address the requirements of this Order.
   
7. Without limiting the terms of this Order, the Bank 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.
   
8. 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.
   
9. All communications regarding this Order shall be sent to:

1. Mr. Daniel Muccia
   Acting First Deputy Superintendent of Banks
   New York State Banking Department
   Two Rector Street
   New York, NY 10006
   
2. Mr. Richard C. Capone
   Executive Vice President and Chief Operating Officer
   Union Bank of Switzerland
   299 Park Avenue
   New York, NY 10171-0026

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

New York State Banking Department By: _________________________ Elizabeth McCaul Acting Superintendent of Banks Date: ________________________

CONSENT

UNION BANK OF SWITZERLAND and UNION BANK OF SWITZERLAND, NEW YORK BRANCH hereby consent to the foregoing Order.

UNION BANK OF SWITZERLAND UNION BANK OF SWITZERLAND,
NEW YORK BRANCH

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