The High Court has begun to hear a two-month trial of Manchester-based developer Property Alliance Group’s multi-million pound claim against the Royal Bank of Scotland over alleged LIBOR-rigging. PAG alleges that members of the bank’s board knew the LIBOR market was “broken”at a point when it was still selling related products.
In previous decisions, PAG was described as a property developer with a portfolio worth about £200m, and a former customer of RBS.
PAG alleges breach of its customer agreement with RBS, claiming that RBS recommended and sold four LIBOR-based interest rate-derivative products, in sums of between £60m and £75m, between 2004 and 2008 as “hedging” or “protection” against PAG’s interest rate risk in respect of investment loan facilities.
It says that the swaps had a “toxic effect” and that, among its losses, it incurred breakage costs of £8m in terminating them.
PAG claims that the RBS board were aware of “serious problems” with Libor in 2007.
RBS says it will “vigorously” defend the claim, denying wrongdoing and that the swaps were mis-sold.
