US senator seeks to block SBC-UBS deal

The multi-billion merger between the Swiss banking giants SBC and UBS, which would create the world's second largest bank, faces a challenge in the United States, it emerged yesterday.

Alfonse D'Amato, a leading US Senator, has called on Alan Greenspan, the chairman of the Federal Reserve, to block the deal.

Mr D'Amato, chairman of the Senate Banking Committee and a critic of Switzerland's World War Two role, urged the Fed not to bless the merger until the banks give a clearer account of their handling of dormant Holocaust- era accounts and their business ties with Nazi Germany.

Mr D'Amato wrote: "SBC and UBS have yet to provide answers to a host of questions regarding their conduct regarding the disposition of assets of Holocaust victims and their heirs, as well as their record of collaboration with the Nazis during the war."

Mr D'Amato also urged the Fed to make sure the Swiss Federal Banking Commission met US bank supervision standards.

In his letter, Mr D'Amato, a New York Republican, also highlighted the scale of the losses from UBS's London-based equity derivatives department, which he said could be as high as $689m (pounds 430m). UBS denied the claim, saying its derivatives trading losses were limited to pounds 190m.

A Fed spokesman said yesterday it would take Mr D'Amato's letter into account as it considered the merger application but declined to elaborate on what role the concerns about the Holocaust victims' assets could ultimately play in the decision.

Yesterday the two Swiss banking giants said they were confident American authorities would approve their merger plan. UBS spokesman Robert Vogler said: "We have indications that the Fed will not mix Holocaust issues with merger issues."

Meanwhile it emerged yesterday that as many as 2,000 London-based UBS staff could lose their jobs compared to less than 1,000 among the SBC workforce.

It is understood that SBC will make up 70 per cent of the City operation of the merged bank compared with just 30 per cent for UBS.

As the combined workforce will probably be cut from 6,300 to 3,300, this translates into about 990 positions filled by UBS, who currently have 2,900 in the City, while SBC's payroll will fall to about 2,300 from 3,400.

- Reuters