UPDATE 1-Vanished communist cash still causing pain for Swiss bank Baer


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ZURICH (Reuters) – Thirty years after the Berlin Wall fell, private bank Julius Baer (BAER.S) is still fighting German government efforts to recover hundreds of millions in East German cash that vanished via Swiss accounts after the communist state collapsed.

FILE PHOTO: The sign for Swiss bank Julius Baer is seen at a branch office in Luzern, Switzerland, November 23, 2017. REUTERS/Arnd Wiegmann

Julius Baer said late on Wednesday it had set aside 153 million Swiss francs ($153 million) to fight the case, but vowed to appeal a Zurich court’s ruling this week that withdrawals dating back nearly three decades that the German government contends were illegal, should be returned.

The money is part of a stash allegedly worth hundreds of millions of euros that an East German-registered company that handled import-export business with the West, Vienna-based Novum Handelsgesellschaft, helped funnel out of East Germany.

Julius Baer was swept up in the case because it bought Zurich-based Bank Cantrade from UBS in 2005, which the German government contends allowed unauthorized withdrawals from Novum accounts between 1989 and 1992.

“Julius Baer will claim for reimbursement (from UBS) of any finally awarded amount,” Zurich-based Baer said in a statement. “Julius Baer has always contested and continues contesting the claims.”

UBS (UBSG.S) declined to comment.


Baer is just the latest European money manager to be snared in this long-running post-Cold War dispute over communist cash, which Novum’s ex-director, an Austrian communist named Rudolfine “Red Fine” Steindling who died in 2012, was accused of moving into Austrian Communist Party accounts that later went missing.

In 2013, UniCredit’s Bank Austria took a profit hit after the German government demanded 254 million euros ($280 million) that Steindling was alleged to have moved via Novum accounts at a Swiss subsidiary. [reut.rs/389fZEg]

In the ongoing Swiss case, the Zurich Court of Appeals originally sided with Julius Baer in 2018, but reconsidered its verdict this year when the Swiss Federal Supreme Court sent it back to be reheard.

The Swiss high court concluded there were “obvious shortcomings” in Bank Cantrade’s handling of the Novum funds.

The German agency seeking to recover the money, called the Federal Office for Reunification-related Special Tasks (BvS), could not immediately be reached for comment.

The Austrian Communist Party did not return an email and phone call seeking comment.

($1 = 0.9972 Swiss francs)

($1 = 0.9073 euros)

Reporting by John Miller, Brenna Hughes Neghaiwi and Silke Koltrowitz; Editing by Edwina Gibbs and Elaine Hardcastle


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