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BayernLB Sues Barclays Over Mortgage-Backed Securities

Bayerische Landesbank, Germany’s second-biggest state-owned lender, sued Barclays Plc, Britain’s second-largest bank, over $274 million in residential mortgage-backed securities.

The suit accuses London-based Barclays of making “material misrepresentations and omissions” about the underwriting standards used to issue the mortgages that were pooled together into the offerings, BayernLB said in documents filed today in New York state Supreme Court in Manhattan.

“Plaintiff did not know the true facts regarding defendants’ misrepresentations and omissions in the offering materials, and justifiabily relied on those misrepresentations and omissions,” Munich-based BayernLB said in the filing. “Defendants’ wrongdoing has led directly to plaintiff’s damages, which include loss of market value on the securities.”

Mark Lane, a spokesman for Barclays, declined to comment on the lawsuit in a telephone interview.

BayernLB has filed similar suits in New York state Supreme Court during the past year against other lenders including Bank of America Corp., Deutsche Bank AG, JPMorgan Chase & Co. and Morgan Stanley, seeking damages linked to more than $4 billion in mortgage-backed securities.

Barclays has also been sued by other German lenders in New York state Supreme Court over mortgage-backed securities, including DZ Bank AG, Germany’s largest cooperative lender, Landesbank Baden-Wuerttemberg and HSH Nordbank AG.

Pools of home loans securitized into bonds were a central part of the housing bubble that helped send the U.S. into the biggest recession since the 1930s. The housing market collapsed, and the crisis swept up lenders and investment banks as the market for the securities evaporated.

The case is Bayerische Landesbank v. Barclays Bank Plc, 652697/2012, New York State Supreme Court (Manhattan).

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