Vestia arranges derivatives drama with Deutsche Bank, receives 175 million euros

Housing corporation Vestia has entered into an agreement with Deutsche Bank in the derivatives debacle that almost collapsed in 2012. As part of the settlement, Deutsche Bank is paying 175 million euros to Vestia.


Housing corporation Vestia has entered into an agreement with Deutsche Bank in the derivatives debacle that almost collapsed the housing corporation in 2012. As part of the settlement, Deutsche Bank is paying 175 million euros to Vestia.

The Rotterdam housing company started a case against Deutsche Bank in 2016 at the Court in London. In the first instance it demanded 800 million euros. According to Vestia, the bank had a large share in the derivatives debacle, causing Vestia and the housing sector to suffer more than 2.5 billion euros in damage.

At the time, that claim was based on the bank's "knowledge of, or responsibility for" the bribery by intermediaries of the former Vestia cash manager who had concluded the controversial derivative contracts. Vestia bought these risky financial products to hedge against interest rate risks. The corporation gambled on an interest rate rise, while the interest rate - unexpectedly - went down.

The derivatives had a negative market value due to the fall in interest rates. The banks involved therefore demanded additional collateral payments from Vestia. The corporation eventually had to buy off the derivatives portfolio from the banks for more than 2 billion euros. Other corporations then had to cough up nearly 700 million euros to keep Vestia afloat.

With this agreement, Vestia and Deutsche Bank waive all claims in connection with the derivative transactions.

ref: nunl