UBS AG was sued by Deutsche Postbank AG, a unit of Deutsche Bank AG, over allegations the Swiss lender didn’t honor a 75 million-euro ($100 million) securitization deal.
Postbank says in a London lawsuit that UBS failed to convert leveraged asset-backed securities into collateralized notes under the terms of a contract that required the action if UBS’s credit rating was downgraded. Postbank says the Zurich-based lender is in default because it didn’t convert the assets after it was downgraded along with 14 other banks in June 2012.
UBS denies the allegations and will defend itself vigorously, according to a statement from Richard Morton, a spokesman for the bank.
The Postbank press office in Bonn, Germany, didn’t respond to e-mails requesting comment.
Postbank is demanding early repayment of the full amount under the notes, according to the lawsuit. The court documents released last week contain only a one-page summary of the claim and further details haven’t been disclosed.
Moody’s Investors Service downgraded 15 banks in June of last year because of volatility in capital markets and the risk of “outsized losses,” it said at the time.
UBS, which was fined $1.5 billion by regulators last month for trying to rig interbank interest rates and 29.7 million pounds ($47.9 million) the month before that over Kweku Adoboli’s $2.3 billion trading loss, has said it will trim 10,000 jobs mainly in investment banking and focus on its wealth management business.
The case is Deutsche Postbank AG v. UBS AG, High Court of Justice, Queen’s Bench Division, Commercial Court, 12-1628