Barclays, Bank of New York Sued by U.S. Bank Over Collateral

Barclays Plc (BARC), Bank of New York Mellon Corp. (BK) and MBIA Inc. (MBI) were sued by U.S. Bank NA over control of $2.27 million in escrowed collateral.

U.S. Bank, based in Cincinnati, wants a judge to order the defendants to resolve their disputes over the money between themselves and to prohibit them from suing U.S. Bank over it, according to a complaint filed yesterday in federal court in Manhattan.

Unless the dispute is resolved, “U.S. Bank will have to continue to hold the escrowed funds,” though it has “no interest” in the money except for legal fees, the bank said in the complaint.

Barclays, based in London, and BNY Mellon are holders of notes secured by collateral consisting of bundled commercial mortgage loans and other assets, according to court papers.

Also named in the lawsuit is Angelo, Gordon & Co. of New York, a collateral manager under a 2007 agreement, according to court papers.

Brandon Ashcraft, a Barclays spokesman; Kevin Heine, a BNY Mellon spokesman; and Kevin Brown, a spokesman for Armonk, New York-based MBIA, declined to comment on the complaint.

The case is U.S. Bank v. Barclays, 11CV9199, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporters on this story: David Glovin in New York at dglovin@bloomberg.net Phil Milford in Wilmington, Delaware, at pmilford@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

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