AmsterdamDeutsche Bank has settled a legal dispute with the Dutch housing association Vestia. The bank will pay 175 million euros to Vestia, the Dutch said this Friday.
Vestia had gone bankrupt in 2012 after derivatives traded the company for a loss of two billion euros. The housing company had acquired derivatives from the Dutch bank ABN Amro, Deutsche Bank and other major investment banks to hedge against rising interest rates. The bets went wrong.
In the past, the Deutsche Bank was already attracting attention in the derivatives market: The insurance premiums that investors can use to hedge against a default on the Bank's bonds are much higher than those of the competition. However, a new credit derivative from Deutsche Bank is safer than the previous bonds. The better a bond is protected against bankruptcies, the cheaper the default insurance for this bond is.
More: Conversion plans at Deutsche Bank – CEO Christian Sewing in an interview.
. (tagsToTranslate) Deutsche Bank (t) Law (t) Vestia (t) Housing (t) Money house (t) Derivatives (t) ABN Amro