Credit Suisse Group AG (CSGN) is seeking about 83.2 million euros ($108 million) from Stichting Vestia Groep to unwind interest-rate derivatives after the Dutch affordable-housing provider failed to provide more collateral.
The Swiss bank is seeking the payment and other relief after Vestia failed to meet a deadline to offer more security, according to a claim filed Nov. 22 with a London court and obtained by Bloomberg News today.
Vestia agreed with a group of nine banks in June to unwind derivative contracts after nearly collapsing when falling interest rates meant it had to post more collateral. Vestia has forfeited 1.3 billion euros in collateral it had already provided and agreed to repay 700 million euros to the banks, including Deutsche Bank AG, ABN Amro Group NV, Citigroup Inc. and Rabobank Groep. Other Dutch housing associations will help cover the 700 million-euro payment.
“Vestia reached an agreement with all parties according to a fixed formula,” said Ronald Florisson, a spokesman for the Rotterdam-based housing organization. “A similar offer was made to Credit Suisse, which refused.”
All parties should be treated equally and Vestia will defend itself against the claim, he said.
Credit Suisse spokesman Adam Bradbery declined to comment on the case or the reason why the bank didn’t join other lenders in the settlement.
Vestia was obliged to pay additional collateral to Credit Suisse, based in Zurich, if the market value of the derivatives exceeded 100 million euros, according to the court filing. On June 5, they had a mark-to-market value of 109 million euros, the bank said. The next day, Vestia said it had stopped meeting collateral calls from derivative counterparties, according to the document.
Vestia once held derivatives with a face value of 22 billion euros, it said in February, compared with 6.1 billion euros in loans it had outstanding. The holdings were “far too big,” and didn’t befit a housing organization, former Dutch Interior Minister Liesbeth Spies wrote in a letter to parliament dated June 19. The loss, which had been as much as 3 billion euros, stood at 1.7 billion euros as of March, she said.
The remaining banks that joined in the agreement were Barclays Plc, BNP Paribas SA, JPMorgan Chase & Co., Nomura Holdings Inc. (8604) and Societe Generale SA (GLE), two people with knowledge of the discussions who asked not to be identified because the information is private said in June.
The Dutch government has asked Vestia to make an inventory of damages and to hold liable “those responsible within and outside Vestia,” Spies said last month. Under the June 18 agreement, which the government helped negotiate, the housing association reserved the right to hold banks liable for any fraud, bribery or other wrongdoing on their part, the Interior Minister said.
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