UBS faces Senate questions about Credit Suisse Nazi dealings

The head of UBS’ Americas arm and the lender’s top lawyer are both scheduled to testify at a U.S. Senate hearing next week into Nazi-era accounts at Credit Suisse, the scandal-hit rival it acquired in 2023. 

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Robert Karofsky, seen as a leading candidate to replace UBS CEO Sergio Ermotti, and group general counsel Barbara Levi have been added to the list of witnesses scheduled to speak on Feb. 3 at the Senate judiciary committee hearing in Washington.

“We look forward to engaging in a productive discussion with the Committee regarding Credit Suisse’s historic issues,” UBS said in a statement on Monday when asked about their upcoming appearance.

Rabbi Abraham Cooper of the Simon Wiesenthal Center and Neil Barofsky, the independent ombudsman overseeing the investigation into the Credit Suisse accounts, will also speak at the hearing entitled, “The Truth Revealed: Hidden Facts Regarding Nazis and Swiss Banks.”

The hearing was pushed for by senior U.S. senators Chuck Grassley and Sheldon Whitehouse to ensure Credit Suisse’s cooperation in the the search for evidence of Nazi accounts left out of a landmark 1998 settlement that saw Swiss banks pay $1.25 billion for their handling of Holocaust victims’ accounts. 

The campaign stems from a 2020 report in which the Simon Wiesenthal Center said it had discovered a list of 12,000 Nazis living in Argentina, many of whom had contributed money to accounts at a predecessor bank of Credit Suisse as they fled at the end of World War II.

The thorny issue of Nazi accounts has become a headache for UBS, one it inherited when it bought Credit Suisse from near collapse in 2023. For the Zurich-based bank, it’s more than a case of just going along with an exercise in historical research. UBS needs to stay on the good side of U.S. regulators as it pushes to build its business managing money for rich Americans. 

UBS has evaluated the possibility of moving outside Switzerland, and the Americas represent both the largest single revenue source for the global wealth manager and a big priority. Although less likely now, such a move remains a possibility, if a reported early-stage deal with the Swiss government on additional capital requirements falls apart. 

UBS said in July that it was “committed to contributing to a fulsome review of the Credit Suisse archives concerning Nazi-linked legacy accounts previously held at predecessor banks of Credit Suisse,” noting its cooperation with Barofsky. It said it was providing “all necessary assistance to facilitate his review of the Credit Suisse archives to continue to shed more light on this tragic period in history.”

Ronald Lauder, the billionaire president of the World Jewish Congress says that the 1998 settlement was incomplete because “we didn’t have the full records, so we were negotiating blind.” “We probably left $5 to $ 10 billion on the table,” he said in an interview last year. 

UBS hasn’t publicly disclosed provisions for potential financial exposure from the Nazi accounts probe. 

Barofsky was brought in by Credit Suisse to oversee the probe and his team found volumes of previously undiscovered material in Credit Suisse’s archives, including records of accounts for an SS-run company. But he was replaced by Credit Suisse in 2022, a decision strongly criticized at the time by Lauder and the U.S. senators. 

He was rehired at the end of 2023. In his last update on the probe last year, he said he found extensive new material and a pattern of “obstruction” on the part of Credit Suisse. He is expected to wrap up his investigation as early as this year.