Developer alleges Ulster Bank mis-sold him loan products

Developer David Agar has alleged before the Commercial Court that Ulster Bank mis-sold him financial products related to interest rates on loans totalling €87m.

In an action which opened yesterday before Mr Justice Peter Charleton, Mr Agar claims the right to an indemnity against any loss or liability arising from the bank’s execution of the swaps. He is also claiming damages for alleged breach of contract and alleged breach of duty by the bank.

The bank denies the claims and has counterclaimed for €47m against him related to loans for the Harcourt Building.

The case arises out of a number of interest rate swap products on loans Mr Agar entered into with Ulster Bank. He claims those products were recommended to him by the bank following a meeting in July 2007 but their effects were not explained to him.

In his claim, Mr Agar, Brighton Road, Foxrock, is seeking a declaration that five financial products purportedly entered into between him and the bank be rescinded.

Opening the case, his counsel Mark Sanfey said Mr Agar had a relationship with the bank going back to 2000. In 2005 he borrowed €36m to buy out his former partner’s stake in the Harcourt Building. The interest rates applicable for that loan was 3.84% for five years and 3.54% for seven years.

The building was put up as security for that loan. In November 2006 the bank approved an equity release of €3m to Mr Agar increasing the total liability to €39m. Prior to July 2007, an offer for a stake in the building was tendered and Mr Agar informed the bank of this.

The bank advised him not to accept the offer and to apply for further equity release for other projects. Mr Agar did so and entered a loan agreement in July 2007.

Mr Agar realised the impact of low interest rates, he tried to get out of the agreements but the cost of break out was expensive. As of June 2012, the cost of breaking out of the five products was estimated at more than €12m.

The case is to last several weeks.