The bank-on-bank litigation taboo has fallen in Europe. So far it’s been a boon to US courts, and to one US firm in particular. Michael Goldhaber reports
In 2002, a German bank in the backwater of Kiel, on the shores of the Baltic Sea, sought to boost its returns by investing in a synthetic credit default obligation (CDO) issued by Swiss banking giant UBS. The investment was a disaster: a near-total loss of $500m (£306m). When the German investor, now called HSH Nordbank, sued in February 2008, it became the first non-US party to bring a significant credit default case and made UBS the first non-US bank on the receiving end of one. This case between two European financial institutions is at the forefront of financial crisis claims on two continents – but mostly, ironically, in the US.
