The City of St. Poelten, capital of the province of Lower Austria, is preparing to sue regional lender Raiffeisenlandesbank Niederoesterreich-Wien AG regarding a derivatives swap agreement, Wiener Zeitung reported, citing city spokesman Martin Koutny.
“The judiciary should be brought in to clarify the different legal views of the city and the financial institution regarding the validity of a swap transaction,” Koutny told the Vienna-based paper. St. Poelten’s municipal council will make the final decision on Dec. 13, the paper said.
The Swiss franc swaps may have an annual interest burden of as much as 3.5 million euros ($4.7 million), municipal councilor Bernhard Wurzer told the paper. Exiting the agreement would cost between 75 million euros and 80 million euros, Wiener Zeitung said, without saying where it got the information.
“We have held talks with St. Poelten, but have not yet received any complaint,” RLB NOe-Wien spokeswoman Michaela Stefan said to Bloomberg News.