Unitech accuses Deutsche Bank of improper sale of swaps

LONDON: Unitech accused Deutsche Bank AG of selling it an interest-rate swap that wasn't suitable and wasn't properly explained, according to a London lawsuit over a $150 million loan deal.

Unitech filed a counterclaim in May arguing Deutsche Bank was negligent to sell an unsuitable hedging agreement, and owed damages that cancelled out its debt, according to court documents. Germany's biggest bank had earlier sued Unitech saying a unit of the company owes $11 million under the swap contract and has missed payments.

Deutsche Bank "knew, or must have appreciated, that it was likely to make significant amounts of money" from the contract at Unitech's expense, the company said in its lawsuit. Interest-rate swaps that turned out to be costly for customers and profitable for banks have led to hundreds of lawsuits and an investigation by the UK Financial Services Authority into how they were sold.