Irish Nationwide Building Society, the nationalized property lender, said two subordinated bondholders started proceedings in the English courts against the bank and the trustee of the debt program.
Two holders of Irish Nationwide’s 13 percent lower Tier 2 bonds due 2016 are asking the court to direct the trustee to open proceedings against the lender under the terms of the notes, Irish Nationwide said in a statement today. No event of default or potential event of default has occurred and the terms are being honored, Irish Nationwide said in the statement.
“The Society considers the claimants have no cause of action and intends to vigorously defend the proceedings,” Irish Nationwide said.
The government is seeking to limit the cost of a banking bailout which may reach more than 50 billion euros ($70 billion). The investors are going to court after Irish Finance Minister Brian Lenihan said in September that subordinated bondholders in Irish Nationwide would be treated the same as those in nationalized Anglo Irish Bank Corp., who are being offered 20 cents on the euro for their notes.
Irish Nationwide’s 2016 bonds are quoted at about 30 cents on the euro, according to prices from Jefferies International Ltd. in London.
Irish Nationwide, which already received 2.7 billion euros in state aid, needs that amount again, Lenihan said in September.