Bayerische Landesbank, the second-biggest German state-owned lender, sued Deutsche Bank AG in New York state court over $810 million of residential mortgage-backed securities.
The suit, filed in state Supreme Court in Manhattan yesterday, accuses Frankfurt-based Deutsche Bank of fraud in connection with the sale of the securities, pools of home loans securitized into bonds that were a central part of the housing bubble that helped send the U.S. into the biggest recession since the 1930s.
“Deutsche Bank originated, purchased, financed and securitized exceptionally high-risk loans into these RMBS, all while internally disparaging the poor quality of these loans and the RMBS they backed as ‘pigs’ and ‘crap,’” lawyers for Munich-based BayernLB said in the lawsuit.
Deutsche Bank believes the claims are without merit and will “vigorously” defend itself, spokesman Duncan King said in a telephone interview. The Frankfurt-based bank is Germany’s biggest lender.
The case is Bayerische Landesbank v. Deutsche Bank AG, 651264/2012, New York state Supreme Court (Manhattan).