May 4, 2007 / 11:35 AM / 12 years ago

BAWAG restores Cuban accounts after public uproar

VIENNA, May 4 (Reuters) - Austrian bank BAWAG P.S.K. on Friday offered to reinstate accounts held by Cuban nationals which it had cancelled last month due to the imminent takeover by a U.S. investor subject to U.S. sanctions against Cuba.

The cancellations, which came after private equity fund Cerberus Capital [CBS.UL] agreed to buy the bank last year, caused a public uproar in Austria and triggered the foreign minister to charge the bank with violating European Union rules.

BAWAG said Cerberus had won over U.S. authorities to grant BAWAG an exception from the sanctions, which ban any U.S.-owned bank from offering banking services to Cubans. Similar exceptions are in place for European units of several U.S. banks.

“The board of BAWAG P.S.K. with immediate effect revokes the decision to terminate business relationships with Cuban nationals,” BAWAG said in a statement. “The board apologises for problems and irritations that arose from the earlier measures.”

Cerberus, whose Chairman is former U.S. Treasury Secretary John Snow, agreed to buy BAWAG for 3.2 billion euros ($4.4 billion) last year from BAWAG’s current owner, the Austrian trade union federation.

BAWAG had been linked to the failure in 2005 of U.S. futures trader Refco Inc RFXCQ.PK, its long-time business partner.

Investigations triggered by Refco’s collapse unearthed billions of euros of losses BAWAG had hidden for several years. Under the terms of a bail-out orchestrated by the Austrian government, the trade unions were forced to sell the bank.

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