Deutsche Bank to pay investing compensation

AFP
AFP - [email protected] • 22 Mar, 2011 Updated Tue 22 Mar 2011 14:55 CEST
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Germany's biggest bank, Deutsche Bank, on Tuesday was told to pay €541,000 ($768,000) in compensation to a client who had not been sufficiently informed of the risks of certain financial products, the court said.

In a ruling that could set a legal precedent, Deutsche Bank "failed to fulfill its advisory obligation," the highest German federal court in Karlsruhe said.

It ordered Deutsche Bank to pay compensation to the plaintiff, a plumbing supplies manufacturer in the western state of Hesse, who bought a complex investment in 2005.

The so-called "spread ladder swap" consisted of exchanging long-term credits for short-term ones in the aim of earning money on lower short-term credit rates.

When short-term rates rose during the financial crisis, several hundred German local governments and companies lost several hundred million euros from the investments.

The federal court's ruling was widely anticipated by many who plan similar actions against Deutsche Bank or others that sold similar financial products.

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AFP 2011/03/22 14:55

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