Bank sued over alleged mis-selling of derivatives

The owners of Belgard Retail Park in Dublin have sued Ulster Bank Ireland over the alleged mis-selling of derivative loan facilities or swaps totalling almost €54m.

Mr Justice Peter Kelly yesterday agreed to fast-track in the Commercial Court the action by Komady Ltd and Michael O’Reilly, owners of Belgard Retail Park, Belgard Rd, Dublin, against Ulster Bank Ireland Ltd.

Michael Howard, counsel for the plaintiffs, said the bank was consenting to transfer and the sides had also agreed a timetable for exchange of legal documents. The judge approved that timetable and noted it meant the case would return before the court in May.

In their action, solicitors for Komady and Mr O’Reilly outlined the case relates to four loan facilities concerning the financing and indebtedness advanced for Belgard Retail Park. The park continues to successful, they said.

The case relates to two facilities made between Komady and Ulster Bank, one dated Jun 2005 for €24.5m and the second dated Jun 2006 for €2.5m. It also concerns two facilities made between the bank and Mr O’Reilly, one dated Sept 2005 for €24.4m and one dated Jun 2006 for €2.5m.

It is claimed the Belgard loan agreements were a result of the refinancing of older liabilities as the historic development of the site had been financed by Anglo Irish Bank.

It is alleged, after the loan agreements were executed, the bank or its servants or agents advised the plaintiffs to enter into the derivative agreements. Those facilities, which expired in 2011, are cross-guaranteed by the plaintiffs. It is claimed a large portion of the liability represented by the agreements was subject to a hedging arrangement to take account of any increase in interest rates over and above 5% for a significant period of time.

It is claimed the code of conduct for investment business under the Central Bank Act applies to the instruments but, it is alleged, the provisions of the code were not adhered to in relation to execution of the derivative agreements or in relation to the advice received concerning them.

It is alleged the agreements were not consistent with the best interests of the plaintiffs and were not properly explained to them. The “calamitous effects” of breaking out of the instruments were never explained nor was it explained that break benefits would accrue in certain circumstances, it is stated.

© Irish Examiner Ltd. All rights reserved

More in this Section

Michael Noonan keeping his options open on AIB sale

State’s Data Protection Commissioner’s Office and US authorities to probe Yahoo breach

Oil price falls 3% ahead of key OPEC meeting

Societe Generale rogue trader Jerome Kerviel sees fine slashed by French court


Breaking Stories

Apple said to be considering its first retail store in Seoul, right next to Samsung's HQ

Snapchat's new sunglasses will make sure nothing is left unrecorded

The Watch Dogs 2 story trailer sends you into the world of hackers

UPS have started trialling drone deliveries

Lifestyle

London Design Festival will inspire your next interiors project

Be inspired by this award-winning Galway home

The top 6 trends for S/S 2017 from London Fashion Week

Tempting recipes from Paula Lambert’s cookbook Cheese Glorious Cheese

More From The Irish Examiner