ICEP Report Annexes

Report of the Independent Committee of Eminent Persons Annex 1 Members of the Independent Committee of Eminent Persons CHAIRMAN Klaus Jacobi, former State Secretary for Foreign Affairs of Switzerland, Paul A. Volcker, and Swiss Ambassador to the United States former Chairman of the Board of Governors of the Federal Reserve System Peider Mengiardi, former Chairman of the Board of Directors and Appointed by Jewish Organizations: Chief Executive Officer, ATAG Ernst & Young Ruben Beraja, former President, Banco Mayo Coop. Ltdo. Alternates Avraham Burg, Knesset Chair and former Chairman, Hans J. Baer, former Chairman Jewish Agency for Israel of the Board of Directors, Bank Julius Baer Ronald S. Lauder, Chairman, RSL Communications Ltd. René Rhinow, Professor of Law, University of Basel; Senator, Swiss Parliament Alternates Counsel Zvi Barak, Chairman of the Board of Trustees, ICC Jerusalem International Convention Center Michael Bradfield, Partner, Jones, Day, Reavis & Pogue Israel Singer, Secretary General, World Jewish Congress Pamela Sak, Associate, Jones, Day, Reavis & Pogue Appointed by the Swiss Bankers Association: Special Consultant Curt Gasteyger, Professor, Ian Watt, Graduate Institute of International Studies, former Head of the Special Investigations Unit, Geneva, Switzerland Bank of England 25 Report of the Independent Committee of Eminent Persons Annex 1 26 Report of the Independent Committee of Eminent Persons Annex 2 Banks Selected for Investigation Process of Selecting the Banks • The existence of any alleged questionable actions which was evaluated using a histori- 1. ICEP completed forensic accounting inves- cal research database developed during the tigations at 254 of the 481 Swiss banks that existed preparatory work of the First Phase; in the Relevant Period (1933-1945) and for which it • The proportion of bank branches in cantons or a successor bank exists in some form today.1 These with a high Jewish population in 1941; and 254 banks are now represented by 59 banks as a • The proportion of branches near Swiss bor- result of mergers and consolidations over half a cen- der entry points for Jewish refugees. tury. The remaining 227 banks that were not investigated are almost exclusively small, local, and 3. Based on an evaluation of these factors, it regional banks that had retail domestic business with was decided to review 254 banks that are now rep- few contacts with foreigners. The banks investigated resented by 59 existing banks. One hundred and account for approximately 82 percent of total Swiss ninety-one other banks were determined not to be bank liabilities in 1945; the banks considered most relevant to the investigation because they were likely to have previously unreported dormant founded after 1945 and never acquired a bank that accounts. existed during the Relevant Period. A further 205 banks that existed during the Relevant Period were 2. The following criteria were used to select categorized as discontinued because they have since banks for the investigation: been liquidated, redefined as non-banks, or no longer • Whether the bank existed during the period appear on the Swiss Federal Banking Commission 1933 to 1945 or acquired a bank that existed register of banks. during the period 1933 to 1945; • The size of the bank in 1945 (that is, the 1945 4. As previously noted, the banks investigated bank liabilities plus the liabilities of any by ICEP account for 82 percent of the 1945 Swiss banks currently owned that existed during bank liabilities. They also account for the greatest 1933 to 1945); number and value of dormant accounts reported in • The number and value of dormant accounts prior surveys of dormant accounts. Specifically, of the bank as reported in the 1995 Survey;2 these banks held: • The proportion of the bank’s branches lo- • 99 percent of the value and 94 percent of cated in Swiss cantons bordering foreign countries; 1 See, infra, Exhibit A: List of 254 Banks Investigated. There were an additional 205 banks that existed in the Relevant Period, but they no • The bank’s results for the 1962 Survey of longer exist today. Holocaust victim accounts and the extent of 2 See Annex 5: Treatment of Dormant Accounts of Victims of Nazi Persecution. 3 current claims against the bank; 3 See id. 27 Report of the Independent Committee of Eminent Persons Annex 2 the number of dormant accounts reported to Cantonal Banks ATAG Ernst & Young in 1997; 7. Investigations were carried out at 16 cantonal • 91 percent of the value and 86 percent of banks. Because of acquisitions and mergers during the number of dormant accounts from the and after the Relevant Period, these 16 banks 1995 Survey; account for 70 of the banks that existed during the • 97 percent of the number of claims submit- Relevant Period. Cantonal banks, nearly all of which ted to the Swiss Banking Ombudsman; were founded in the nineteenth century, are banks • 98 percent of the number of 1962 claims; that have been established by cantonal decree to sup- and port the economic activities of the rural and urban • 98 percent of the value and 96 percent middle classes within their cantons. Most cantonal of the number of 1945 freeze of German banks were guaranteed by their cantons and that accounts.4 guarantee provided these banks with a significant advantage in attracting savings deposits. They served While the banks investigated were located through- a clientele mainly located within their own cantons, out Switzerland, a large proportion were headquar- and their primary business activity during the Rel- tered in the region between Geneva and St. Gallen. evant Period was the financing of regional mortgage BANKS INVESTIGATED loans, providing financial services to individuals, small- and medium-sized industries, retail trade Large Commercial Banks5 businesses, and hotels and restaurants. 5. ICEP carried out investigations at each of the three large commercial banks -- Credit Suisse 8. During the Relevant Period, approximately Group, Swiss Bank Corporation, and Union Bank 60 percent of the cantonal banks’ assets were in of Switzerland -- and most of their affiliates. Swiss mortgage investments. In fact, the cantonal banks Bank Corporation and Union Bank of Switzerland had a very dominant position in the Swiss mortgage merged in 1998 to form UBS AG. These two banks business, with more than half of the mortgage re- were investigated separately after, as well as before, ceivables financed by banks in the Relevant Period. the merger. These three banks and their affiliates The majority of these mortgages were residential, accounted for approximately 40 percent of 1945 business, and agricultural mortgages, with only a Swiss bank liabilities and 141 of the number of the small percentage of hotel and restaurant mortgages. relevant banks that existed during the Relevant Pe- riod and still exist. 9. The cantonal banks were generally prohibited from financing unsecured loans and participat- 6. During the Relevant Period, the three large ing in speculative securities trading for their own commercial banks were headquartered in the major account. While the cantonal banks were obligated centers of business -- Credit Suisse and UBS in to limit the scope of their business activities to the Zurich and SBC in Basel. They participated in vir- canton in which they were located, they were not tually all kinds of deposit-related activities and in many other areas of banking, including mortgage 4 See Annex 3: The First and Second Phases of the Investigation, para- banking, custody, securities brokerage (including graph 51. 5 Much of the information in this section on the large commercial banks, underwriting), securities borrowing and lending, and in the following sections on the cantonal banks, the private banks, and the banks not investigated, is drawn from a paper by Sebastien Guex interbank operations, foreign exchange, precious & Malik Mazbouri, Report on the Organization and Characteristics of metals, documentary credits and guarantees, and fi- the Swiss Banks Between 1933 and 1945 (1999). 6 Swiss National Bank, Die Banken in der Schweiz, Statistical Report duciary transactions.6 for 1996, at 22-26 (hereinafter “Statistical Report for 1996”). 28 Report of the Independent Committee of Eminent Persons Annex 2 necessarily prohibited from participating in foreign underwriting, safe deposit boxes, and portfolio and investment activities and from receiving foreign asset management. The private banks also had a deposits. During the Relevant Period, cantonal banks prominent role, along with the major banks of Swit- were also active in many kinds of deposit-related zerland, in the capital markets and in the establish- activities, asset management, safe deposit boxes, ment of financial corporations and investment trusts. project finance, precious metal and foreign exchange Furthermore, the private banks maintained very trading, personal loans, and bonds. close relationships with the major commercial banks and finance companies. 10. The cantonal banks that were not investigated account for only 4 percent of the 1945 Swiss BANKS NOT INVESTIGATED bank liabilities and are located in smaller cities and towns in Switzerland. 14. The banks that were not part of the ICEP investigation account for approximately 18 percent Private Banks of the 1945 Swiss bank liabilities. However, these banks also accounted for only 1 percent of the value 11. Investigations were carried out at 25 private and 6 percent of the number of dormant accounts banks,7 which represent 43 banks that existed in the reported to ATAG Ernst & Young in 1997. They also Relevant Period. Private banks were the first banks had only 2 percent of the number of 1962 claims, established in Switzerland, and most are organized and 2 percent of the value of 1945 freeze accounts. as sole proprietorships or partnerships. One of the These banks fall into the following four categories: key distinguishing characteristics of private banks 153 regional and savings banks, 21 cantonal banks, is that they were not obligated by law to publish 7 cooperative banks, 21 foreign-owned banks or their financial statements during the Relevant Pe- branches, and 25 other banks.8 Each of these types riod.

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