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Friday, August 21, 1998 Published at 20:52 GMT 21:52 UK

World: Europe

Swiss bank shuns Holocaust settlement

How stolen gold ended up in Swiss bank accounts

The Swiss central bank has refused to make any contribution to a $1.25bn settlement reached between Switzerland's two biggest commercial banks and Nazi holocaust victims whose assets were lost during the Second World War.

The Swiss National Bank's board said participating in the accord would give an "official character" to the settlement, "which would not serve the general interests of the country."

It said that any obligations arising from its wartime activities were settled in a 1946 agreement, and added that it had already paid 100m Swiss francs ($69m) to a Swiss fund for needy Holocaust survivors in 1997.

The board said it regretted some of the decisions taken by its wartime directors, but rejected the jurisdiction of an American court to handle such a case against a sovereign country.

The Swiss government has backed the central bank's decision.

In May the central bank came under attack when a panel of historians concluded it was was negligent, slow to react, and wedded to business as usual during WWII in spite of highly unusual circumstances.

The historians' report dismissed the bank's defence that, by making itself useful, a German invasion was less likely, and says the argument that Switzerland's neutrality obliged it to accept Nazi gold was not credible.

Deal struck after 3 year fight

The deal struck between Jewish plaintiffs and the Union Bank of Switzerland and Credit Suisse earlier this month took months of negotiations and followed three years of often-bitter accusations.

The deal would protect the Swiss central bank, the Swiss government and other Swiss banks - as well as the two banks who signed the agreement - from further prosecution.

States and cities in the United States had threatened to boycott Swiss goods if an agreement was not reached.

The deal has yet to be signed and approved in the US, but the central bank's chairman, Hans Meyer, said: "It is almost certain that the settlement is concluded and will remain so."

The chief executive of UBS, Marcel Ospel, said last weekend that he hoped the central bank would show financial solidarity.

Correspondents say the central bank's refusal to contribute does not jeopardise the agreement.

Several large Swiss companies including Novartis and Roche have reportedly indicated they will contribute to the settlement.

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