Property investor Glenn Maud has lost a High Court bid to claim almost €1bn from Royal Bank of Scotland.
The case is “high-value and complex”, according to the judgment handed down by judge Mr Justice Picken this week.
It is set against the backdrop of allegations of Euribor rate-rigging and a transaction that was “apparently Europe’s “largest ever property deal”, according to the ruling.
Maud and his business partner Derek Quinlan purchased the bank’s Spanish headquarters in 2009 through their investment vehicle Marme. The transaction was in part financed by a loan of €1.6bn euros from a group of lenders including RBS.
The terms of the loan required Marme to set up an interest rate hedge, which it did through interest swaps.
This case is about Marme’s liability to make payments on the swaps. Marme argued it should either be paid €996m or the swap agreement should be terminated because the Euribor rate used to set repayments had been rigged.
Marme cites the behaviour of banker and convicted rate-rigger Philippe Moryoussef, who was head of European interest rate derivatives at RBS from August 2007 to September 2009.
Last year Moryoussef was convicted and sentenced to eight years in prison for attempting to fix Euribor rates while working at Barclays, the job he had before RBS.
“Marme contends that Mr Moryoussef was manipulating Euribor while at RBS and submitted that, as a result of his activities, RBS should be regarded as, as [Marme’s lawyer] Mr Saini QC put it, a ‘rotten bank’,” the judgment said.
“For its part, RBS does not accept that Mr Moryoussef manipulated, or attempted to manipulate, Euribor while he was employed at RBS, although RBS accepts that he did so while he was with Barclays,” the judgment said.
“It was RBS’s position that Mr Moryoussef was, given his prior conduct when employed by Barclays, a ‘rotten apple in the RBS barrel’ but that this did not make RBS a ‘rotten bank’.”
In addition, RBS and the banks were seeking a declaration from the court that they lawfully terminated the swaps, leaving Marme with a liability of more than €700m.
The case was heard in October and November last year.
Giving judgment this week, Picken J backed the banks, saying that “Marme has no defence either to RBS’s claims or to the non-RBS banks’ claims”.
“It follows, for the reasons just stated and my having rejected the various defences raised by Marme (including its repudiatory breach case), that RBS and the non-RBS banks are entitled to the declaratory relief which they have sought,” the judge concluded.
