Barclays faces trial over Dutch landlord derivatives losses

Barclays is facing a High Court trial next year after being sued by a Dutch social housing association that came close to collapse in 2012 after it bought complex interest rate derivatives.

The housing association, known at the time as Vestia, rents homes to thousands of low-income tenants and brought lawsuits against seven global banks over interest rate derivative contracts sold to it between 2008 and 2011. 

Vestia came close to collapse in 2012 when the derivatives trades soured and it faced a margin call of more than €2bn. It ultimately sought financial support from the Dutch government and the debacle caused a parliamentary inquiry. 

All the related lawsuits, except for the Barclays case, have now been settled before trial, including a case brought against BNP Paribas that was due to start this month.

In the Barclays case, Vestia and its successor company Stichting Hef Wonen are seeking damages upwards of €279mn, according to a claim filed at the High Court. 

According to the claim, Barclays allegedly paid €1.56mn in commissions on the derivative transactions to an intermediary known as Fifa Finance, which then diverted half the funds to pay Marcel de Vries, then treasurer of Vestia, who was later convicted of bribery in the Netherlands in 2018.

The Dutch landlord claims in the court documents that the derivative transactions resulted in “the unjust enrichment of Barclays at Vestia’s expense” and that they were void because de Vries had no authority to enter into them. “Barclays had no sufficient reason to believe that Fifa was in fact providing services to Vestia which justified the sums it paid,” the claim alleges.

Barclays denies the entirety of the claims, is defending the case and has issued a counterclaim. The case is set to go to trial next May. Vestia, which was split into three entities earlier this year, and Barclays both declined to comment.

De Vries was convicted in the Netherlands in July 2018 on charges of bribery, fraud, forgery and money laundering in relation to derivatives transactions with Vestia, according to the High Court claim.

De Vries has lodged an appeal against his conviction, which will be heard in September, according to the Dutch public prosecution service.

Barclays in its defence alleges that there is no “legal basis” for the transactions to be declared as void. Barclays also noted that Vestia “does not allege that Barclays or any of its representatives knew or suspected” about the commission payments through Fifa Finance.

The Barclays case is the last outstanding lawsuit filed by Vestia, which has around 73,560 homes.

In April, BNP Paribas paid €37.5mn to Vestia, settling a lawsuit without admission of liability and avoiding a high-profile trial.

Other banks have also settled lawsuits brought by Vestia over the sale of derivatives, without any admissions of liability.

Société Générale agreed to pay €22.5mn to Vestia in October 2021. Vestia also settled a case with Citibank for €47.25mn in March 2021, and Nomura paid €18.9mn to settle a lawsuit in December 2022.

In October 2015, Vestia and ABN Amro agreed to end all derivatives litigation, with ABN paying €55mn. Deutsche Bank also agreed to pay €175mn in 2019 to settle a lawsuit from Vestia, without any admission of liability.