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May 07, 2007 

Austrian Bank Reverses Course on Bank Accounts Held by Cuban Nationals

BAWAG P.S.K., an Austrian commercial bank that will soon be majority owned by New York-based Cerberus Capital Management, recently announced that it has reversed course and will revoke its previous decision to close accounts held by Cuban nationals.

The bank has been wrestling with the scope of U.S. sanctions ever since Cerberus announced that it would purchase the bank at the end of 2006. On April 13, 2007, BAWAG P.S.K. stated that as a result of its new ownership, the bank would be required to "terminate business relationships with clients of Cuban nationality" in order to comply with "American laws on economic sanctions administered by the U.S. Department of Treasury's Office of Foreign Assets Control."

On April 15th, the bank issued a statement that it "is not terminating or limiting its business relations with Iranian citizens in Austria" and the "the claims to this effect in the Sunday edition of the daily newspaper "Österreich" are misleading."

On April 25th, the bank "promised that in connection with the termination of the business relationships with Cuban Nationals no fees or charges will be levied from the affected customers. In addition to that BAWAG P.S.K. will also reimburse any costs incurred incurred in connection with the transfer of an account to another banking institution."

At the end of April, the Government of Austria announced that it commenced administrative criminal procedures against BAWAG P.S.K. for refusing to deal with Cuban customers. The bank subsequently sought and apparently obtained from OFAC a license permitting it to conduct business with Cuban nationals in Austria.

In its most recent announcement, the bank stated that it "offers its apologies to its customers for the problems and irritations in connection with the measures taken earlier. All costs eventually incurred by the customers concerned will of course be reimbursed" and that "the management board wishes to stress that the numerous critical statements of public and private parties received by it and addressing the matter in the last weeks were taken very seriously by BAWAG P.S.K. and were seen as support in the decision process."

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