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CORRECTED-UPDATE 1-Dutch housing co-op Vestia seeks damages from Deutsche Bank for derivatives
December 21, 2016 / 9:52 AM / 9 months ago

CORRECTED-UPDATE 1-Dutch housing co-op Vestia seeks damages from Deutsche Bank for derivatives

(Corrects paragraph 13 to add “...A lawyer representing the derivatives broker said his client had acknowledged he earned fees worth millions of euros for selling derivatives...”)

* Vestia alleges Deutsche Bank mis-sold it derivatives

* Deutsche Bank rejects claim

* Previous cases launched by Vestia have mixed record

AMSTERDAM, Dec 21 (Reuters) - Vestia, one of the largest Dutch housing cooperatives, said on Wednesday it had filed a large claim against Deutsche Bank, alleging the bank had improperly sold it interest rate derivatives.

Vestia said in a statement it had filed a claim at the High Court of Justice in London on Dec. 2 and would specify later how much it intended to seek in damages.

It alleged Deutsche Bank was responsible for 800 million euros ($832 million) out of 2.5 billion euros in damages suffered by the entire Dutch housing cooperative sector as a result of mis-sold interest rate derivatives.

“We dispute the claims and will be defending ourselves in court,” a spokeswoman for the German bank said.

Vestia spokesman Ronald Florisson said previous attempts to reach an out of court settlement with Deutsche Bank had failed.

Vestia was close to bankruptcy in 2012, facing losses on a 23 billion euro pile of derivatives that were supposed to protect the cooperative against a rise in interest rates but were later deemed mostly unnecessary, speculative and out of line with the organisation’s charter.

Vestia survived with help from several Dutch government and semi-governmental organisations, including the country’s other housing cooperatives, which were forced to contribute to a recovery plan.

Threatened with large losses in a Vestia bankruptcy, most of the banks that had sold the derivatives agreed in June 2012 to a deal to unwind them, and offer Vestia new financing.

Vestia’s own losses are usually estimated at about 2 billion euros.

Vestia purchased the bulk of its derivatives from ABN Amro and Deutsche Bank, but also from Credit Suisse, Barclays, BNP Paribas, JPMorgan, Nomura and Societe General.

In a related case, Credit Suisse successfully sued Vestia at the High Court for 83 million euros in unpaid bills resulting from the derivatives.

However in 2015, ABN Amro agreed to pay 55 million euros to settle claims from Vestia.

The cooperative’s former finance chief and a derivatives broker are under criminal investigation over the matter. The finance chief denies wrongdoing. A lawyer representing the derivatives broker said his client had acknowledged he earned fees worth millions of euros for selling derivatives.

In 2013, Vestia filed a 1.9 billion euro damages claim against former chief executive Erik Staal. This year, it settled with Staal and 10 former board members for 4.8 million euros with no admission of wrongdoing.

Accountants KPMG and Deloitte are still facing unresolved claims. They deny wrongdoing.

$1 = 0.9607 euros Reporting by Toby Sterling; Editing by Mark Potter, Greg Mahlich

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