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Release Date: November 24, 1999

For immediate release

The Federal Reserve Board announced today its approval of the application of UBS AG, Basel, Switzerland, to establish a representative office in Washington, D.C.

Attached is the Board's Order relating to this action.


Basel, Switzerland

Order Approving Establishment of a Representative Office

UBS AG ("Bank"), Basel, Switzerland, a foreign bank within the meaning of the International Banking Act ("IBA"), has applied under section 10(a) of the IBA (12 U.S.C. § 3107(a)) to establish a representative office in Washington, D.C. The Foreign Bank Supervision Enhancement Act of 1991, which amended the IBA, provides that a foreign bank must obtain the approval of the Board to establish a representative office in the United States.

Notice of the application, affording interested persons an opportunity to submit comments, has been published in a newspaper of general circulation in Washington, D.C. (The Washington Times, August 6, 1999). The time for filing comments has expired, and the Board has considered the application and all comments received.

Bank, with assets of approximately $581.7 billion1, was created as a result of the 1998 merger of Swiss Bank Corporation and Union Bank of Switzerland. UBS is the largest banking organization in Switzerland and the fourth largest banking organization in the world. Bank's shares are publicly traded and widely held, with no single shareholder owning more than 5 percent of the shares.

Bank engages in a broad range of commercial and investment banking activities, directly and through a number of subsidiaries, both foreign and domestic. In the United States, Bank operates state-licensed branches in Stamford, Connecticut, New York, New York, and Chicago, Illinois; federally-licensed branches in San Francisco and Los Angeles, California; state licensed agencies in Miami, Florida, and Houston, Texas; and a representative office in Houston, Texas.

The proposed representative office would act as a liaison between Bank and existing and potential private banking customers in Washington, D.C., and adjacent areas in Virginia and Maryland. The office would market private banking products offered by Bank's New York branch.

In acting on an application to establish a representative office, the IBA and Regulation K provide that the Board shall take into account whether the foreign bank engages directly in the business of banking outside the United States and has furnished to the Board the information it needs to assess the application adequately. The Board also shall take into account whether the foreign bank is subject to comprehensive supervision or regulation on a consolidated basis by its home country supervisor (12 U.S.C. § 3107(a)(2); 12 C.F.R. 211.24(d)(2)).2 In addition, the Board may take into account additional standards set forth in the IBA and Regulation K (12 U.S.C. § 3105(d)(3)-(4); 12 C.F.R. 211.24(c)(2)).

As noted above, Bank engages directly in the business of banking outside the United States. Bank also has provided the Board with information necessary to assess the application through submissions that address the relevant issues. With respect to supervision by home country authorities, the Board previously has determined that Bank was subject to comprehensive home country supervision on a consolidated basis.3 There have been no material changes in the manner in which Swiss banks are supervised and regulated by their home country supervisors since that time. Accordingly, based on all the facts of record, the Board has determined that Bank continues to be subject to comprehensive supervision and regulation on a consolidated basis by its home country supervisor.

The Board also has taken into account the additional standards set forth in section 7 of the IBA and Regulation K (see 12 U.S.C. § 3105(d)(3)-(4); 12 C.F.R. 211.24(c)(2)). With respect to consent of appropriate home country authorities, the Swiss Banking Commission has no objection to establishment of the proposed representative office.

With respect to the financial and managerial resources of Bank, taking into consideration Bank's record of operation in its home country, its overall financial resources, and its standing with its home country supervisor, the Board also has determined that financial and managerial factors are consistent with approval of the proposed representative office. Bank appears to have the experience and capacity to support the proposed representative office and has established controls and procedures for the proposed representative office to ensure compliance with U.S. law.

With respect to access to information about Bank's operations, the Board has reviewed the restrictions on disclosure in relevant jurisdictions in which Bank operates and has communicated with relevant government authorities regarding access to information. Bank has committed to make available to the Board such information on the operations of Bank and any of its affiliates that the Board deems necessary to determine and enforce compliance with the IBA, the Bank Holding Company Act of 1956, as amended, and other applicable federal law. To the extent that the provision of such information may be prohibited by law, Bank has committed to cooperate with the Board to obtain any necessary consents or waivers that might be required from third parties for disclosure of such information. In addition, subject to certain conditions, the Swiss Banking Commission may share information on Bank's operations with other supervisors, including the Board. In light of these commitments and other facts of record, and subject to the conditions described below, the Board concludes that Bank has provided adequate assurances of access to any necessary information the Board may request.

On the basis of all the facts of record, and subject to the commitments made by Bank and the terms and conditions set forth in this order, the Board has determined that Bank's application to establish the representative office should be, and hereby is, approved. Should any restrictions on access to information on the operations or activities of Bank subsequently interfere with the Board's ability to obtain information to determine and enforce compliance by Bank or its affiliates with applicable federal statutes, the Board may require termination of any of Bank's or its affiliates' direct or indirect activities in the United States, or in the case of an office licensed by the Office of the Comptroller of the Currency, recommend termination of such office. Approval of this application also is specifically conditioned on compliance by Bank with the commitments made in connection with the application, and with the conditions in this order.4 The commitments and conditions referred to above are conditions imposed in writing by the Board in connection with its decision, and may be enforced in proceedings under 12 U.S.C. § 1818 against Bank and its affiliates.

By order of the Board of Governors,5 effective November 24, 1999.


Robert deV. Frierson

Associate Secretary of the Board


1 Data are as of June 30, 1999.

2 In assessing this standard, the Board considers, among other factors, the extent to which the home country supervisors: (i) ensure that the bank has adequate procedures for monitoring and controlling its activities worldwide; (ii) obtain information on the condition of the bank and its subsidiaries and offices through regular examination reports, audit reports, or otherwise; (iii) obtain information on the dealings with and relationship between the bank and its affiliates, both foreign and domestic; (iv) receive from the bank financial reports that are consolidated on a worldwide basis, or comparable information that permits analysis of the bank's financial condition on a worldwide consolidated basis; (v) evaluate prudential standards, such as capital adequacy and risk asset exposure, on a worldwide basis. These are indicia of comprehensive consolidated supervision. No single factor is essential and other elements may inform the Board's determination.

3 See UBS AG, 84 Federal Reserve Bulletin 684 (1998).

4 The Board's authority to approve the establishment of the proposed representative office parallels the continuing authority of the District of Columbia to license or otherwise to permit the establishment of offices of a foreign bank. The Board's approval of this application does not supplant the authority of the District of Columbia and the Office of Banking and Financial Institutions ("Office") to license or otherwise to permit the establishment of the proposed office of Bank in accordance with any terms or conditions that the Office may impose.

5 Voting for this action: Chairman Greenspan, Vice Chairman Ferguson, and Governors Kelley, Meyer, and Gramlich.

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