UBS faces an unpleasant New Year's surprise in the U.S. An important financial media outlet cites allegations about previously undisclosed Nazi-linked accounts at Credit Suisse. The United States Senate is also involved.

Fresh allegations about Credit Suisse's wartime activities have reignited fears of potential legal and financial challenges for UBS, which acquired the embattled bank in 2023.

The accusations, tied to previously undisclosed Nazi-linked accounts, have led to intensified scrutiny from U.S. lawmakers and investigators. However, legal experts suggest the risk of substantial new claims may be limited.

Dozens of Investigators

Sources close to UBS have revealed to finews.asia that US investigators are now poring over Credit Suisse's historical archives.

The reopening of the inquiry in late 2023 by UBS' General Counsel Barbara Levi prompted by pressure from US lawmakers – more specifically the Senate's Budget Committee under Chairman Sheldon Whitehouse (D-R.Iowa) and Ranking Member Chuck Grassley (R-I.W.) – has turned into an expansive and well-funded effort.

The inquiry was initially started in 2021 by former Credit Suisse General Counsel Romeo Cerruti after allegations by the Simon Wiesenthal Center of previously undisclosed accounts of high-ranking nazis.

Seemingly Unlimited Resources

The dozens of investigators, described as operating with seemingly unlimited resources at the bank's expense, are reportedly staying for extended periods at Zurich’s luxury Park Hyatt hotel.

The scale of the operation, with lavish accommodations and substantial manpower, underscores the intense focus on Credit Suisse’s wartime legacy.

One insider close to UBS remarked: «the resources dedicated to this inquiry are extraordinary, reflecting the high stakes and the intense pressure from US authorities.»

Familiar Face: Neil Barovsky

Leading the investigation is Neil Barofsky, a former U.S. prosecutor and independent ombudsman. Barofsky is no stranger to Credit Suisse, having served as the bank's court-appointed monitor following its 2014 guilty plea in a US tax evasion case.

In this role, Barofsky oversaw the bank's compliance with U.S. regulations, particularly in preventing further tax evasion. His tenure, initially set for two years, was extended to four years and involved significant oversight, with a team of specialists closely examining the bank's operations.

New Revelations...

The four-year compliance effort reportedly cost Credit Suisse close to 1 billion dollars.

The new revelations, reported by the «Wall Street Journal» on Saturday and based on Barofsky’s findings, have sparked fears that UBS could face renewed financial claims or lawsuits linked to Holocaust survivors, their heirs, or advocacy organizations.

...New Legal Fears

As the main surviving financial entity from the 1990s $1.25 billion settlement between Swiss banks, insurances and Jewish organizations, UBS has inherited the weight of historical scrutiny.

Despite these fears, legal experts consulted by finews.com believe the potential for significant new claims is limited. They point to the precedent set by US District Judge Edward Korman, who oversaw the distribution of the original settlement funds.

Legal and Procedural Barriers

«The behavior of Swiss banks during World War II has been litigated extensively,» noted one expert. «Judge Korman’s ruling created a clear framework for resolving these issues. Any new claims would face substantial legal and procedural barriers, especially given the finality of the previous settlement.»

Nevertheless, Nazi-era allegations add to UBS’s already considerable public relations and legal headaches. The bank is contending with lawsuits from Additional Tier 1 bondholders after the controversial write-down of $17 billion during the Credit Suisse takeover.

Fresh Headaches

UBS is also defending itself against claims from Georgian billionaire Bidzina Ivanishvili, who has accused the bank of mismanaging his assets in several jurisdictions, resulting in significant losses.

While the current investigation has drawn international attention, experts suggest the financial implications for UBS may be limited.

Complex Legacy

The reopening of records does not necessarily indicate new liabilities, particularly given the legal safeguards established by past settlements.

However, the scale of the inquiry, combined with the involvement of the US Senate and leading financial media, highlights the complex legacy UBS has inherited.