Glenn Maud and Irish financier Derek Quinlan bought the freehold of banking giant Santander’s global HQ in Madrid with the loan signed with RBS and other European banks. It was the Continent’s largest property deal at that time.
Maud’s Spanish property vehicle Marme Inversiones is understood to have agreed the loan with the banks led by RBS with fixed interest rate payments.
However, the complex interest rate swap product was valued on the basis of the Euribor – the rate that European banks lend to each other in euros and used as a benchmark against which billions of dollars of contracts are set worldwide.
RBS, which is majority-owned by the British taxpayer after its £45bn bailout in the crash, was fined £95 million by the European Commission (EC) in December 2013 for its involvement in a banking cartel rigging the Euribor.
Marme is expected to contend in the London High Court that the loan contract should therefore be rescinded because RBS was interfering with the interest rate.
Sir Philip Hampton, RBS’s chairman, said at the time of the Euribor fines that it was “another sobering reminder of those past [RBS] failings and nobody should be in any doubt about how seriously we have taken this issue. The RBS board and new management team condemn the behaviour of the individuals who were involved in these activities.”
However, an RBS spokesman said yesterday: “RBS believes that there is no merit to this claim, which it will defend vigorously.” He declined to elaborate on the issue.
Maud was unavailable for comment. But his reported claim is seen as one of the biggest among parties attempting to get the courts to annul historic contracts that were based on manipulated rates such as Euribor and Libor, its London equivalent.
Lawyers say that if the legal action is successful it could spark a flood of similar lawsuits against the bank. In Marme’s case, it is thought it would involve the bank returning £110m in payments already made under the relevant interest rate swap, and forgoing a further £250m RBS is said to want to wind up the contract.
It is believed that RBS, which was the lead bank in the deal, would be likely to argue in court that its settlement with the EC involved no admission that it had manipulated Euribor. Marme was placed under Spanish bankruptcy protection measures last year after failing to repay the original £1.1bn loan it took out.
The case, if it comes to court, will be seen as another embarrassing public relations setback for RBS. Its chief executive Ross McEwan has warned of further “bumps in the road” due to legacy issues that are hobbling an underlying profits recovery at the bank.
Various shareholder groups also allege RBS misled investors on its financial strength in the prospectus for its £12bn rights issue during the financial crash.
The cash call came just months after then-chief executive Fred Goodwin denied the bank needed new capital following what proved to be its disastrous acquisition of ABN Amro in autumn 2007 and subsequent tumble into taxpayer ownership.
One claim, from RBoS Shareholder Action Group, is for £4bn.