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. Last Updated: 07/27/2016

Bank Merger Snared By Holocaust Claims

NEW YORK -- The $10.1 billion merger between Deutsche Bank AG and U.S.-based Bankers Trust Corp. has hit a major snag over Holocaust claims outstanding against the large German bank.

The New York City comptroller called Monday for a delay in the merger until Deutsche Bank resolves billions of dollars of Holocaust claims, thrusting the city again into U.S. foreign policy.

"When federal and state governments review this proposed merger, they should consider how Deutsche Bank is dealing with Holocaust-related claims," Comptroller Alan Hevesi said in prepared remarks. Hevesi took a similar approach with Swiss banks earlier this year, helping to convince them to reach a $1.25 billion settlement with victims of the Holocaust.

New York Mayor Rudolph Giuliani's administration in the past has deferred to the comptroller on the issue.

The merger between Deutsche Bank and Bankers Trust - which would create the world's largest bank by assets - must be approved by the U.S. Federal Reserve and by New York state banking officials as well because New York is a major world financial center.

Holocaust survivors and heirs on Dec. 2 asked the Fed to delay approving the merger until a probe of the German bank's World War II activities was over.

Hevesi last year organized a network of state and local finance officials whose threat to impose sanctions on Swiss banks helped persuade them to settle with Holocaust victims. The U.S. State Department worked hard to head off a boycott of the Swiss banks by local U.S. officials, calling it counterproductive.

The World Jewish Congress, whose objections to the merger of Credit Suisse Group and the Union Bank of Switzerland earlier this year were heeded by New York state banking regulators, said Friday that it was in talks with Deutsche Bank as well as the German government and should decide in about two weeks what position it would take.

A spokesman at Deutsche Bank's Frankfurt headquarters referred Monday to comments made by bank chief executive Rolf Breuer when the merger was announced. "There is nothing new to add," the spokesman said.

Breuer had said German banks already were looking at ways to resolve issues related to the Holocaust.

German Chancellor Gerhard Schr?der's attempts to intervene in the Holocaust issue meant those matters are now being dealt with collectively by Germany at a higher level, he added.

The New York state Banking Department said its policy was to not comment on regulatory matters.

Hevesi said he was expecting the report from the World Jewish Congress on how Deutsche Bank was dealing with a class-action lawsuit filed against it and other German and Austrian banks.

The suit, filed in October in a federal court in New York by Holocaust survivors and heirs, charged that the banks "conspired with the Nazi regime to convert and profit from stolen bank accounts and personal assets," Hevesi said.

Further, he said the suit charged that "conversion of Holocaust victims' assets and profits therefore played an integral role in the Nazi Holocaust and war effort, enabling Nazi Germany to trade on the open international market.