in Bermuda, is embroiled in a banking scandal involving the Rothschild Bank of Zurich.

Newspapers in London and Switzerland have reported that the bank made loans to York Hannover above the level permitted to a single client by the Swiss Banking Commission.

The Commission requires no more than 20 percent of a bank's capital be lent to one creditor on an unsecured basis.

Loans made by RBZ to York Hannover are believed to total $54 million. Some of the loans were secured, but the security turned out to be worthless.

Last month, former RBZ senior executive Mr. Jurg Heer was fired after he was arrested for alleged irregularities linked to large unauthorised loans. In October, the bank disclosed that a recent credit review had found that some of its loans were not fully covered.

As a result, the bank quadrupled its annual provisions in the 12 months to March 31, 1992, to SF99.8 million ($76 million).

York Hannover owns the St. George's Club in Bermuda, which comprises 65 two-bedroom, two-bathroom units, three swimming pools, three tennis courts, restaurant and bar facilities.

The group has two companies in Bermuda, York Hannover (St. George's), which owns the St. George's Club, and York Hannover (Bermuda), which is believed to be an investment company.

It is not known if or how these companies will be affected by the group's financial problems.

Swiss-based York Hannover started out as a property developer but is now into property management. Its extensive operations in Canada have collapsed with huge debts.

The York Hannover group is owned by German-Canadian businessman Mr. Karsten von Wersebe, whom staff say is in Europe trying to put together a rescue package and is not contactable.

Media inquiries are being referred to Mr. David Medhurst, who is managing director of the group's parent company, York Hannover AG, in Lucerne, Switzerland.

However, Mr. Medhurst has failed to return several messages left by The Royal Gazette.