To date in (the Republic of) Ireland, it seems that the only swap mis-selling case to have been settled was the David Agar versus Ulster Bank case which was reported last summer. At least two sets of claims, both against Ulster Bank, are meandering through the court, reported here and here.
And at the start of April 2013, a Dublin couple initiated what is believed to be the first swap mis-selling case against AIB. The case reference is 2013/3521 P. The case was mentioned last week at the Commercial Court division of the High Court. Robert Madden and his wife Rosaleen are reportedly suing AIB over what is reported to be a €45m swap product. They are being represented by Dublin 2 solicitors, Downes who are carving out quite a niche with these cases, being the solicitors on record in the two Ulster Bank cases referred to above.
Just to remind you, interest rate swaps are products which banks sell borrowers which provide insurance against interest rate increases eg if you borrow €100m when the interest rate is 5% you might buy a swap to protect you if the interest rate rose above 6%, but when interest rates reduced, the borrower had to pay the bank, and with the main ECB rate at 0.75% these payments are huge.
In the case of the Madden couple and their case with AIB, they claim they are paying €1.3m per annum in additional payments to AIB for these swap products. The Maddens are reportedly claiming the swap products cover longer periods that the term of the loans and that they seemingly didn’t know or understand that they had been sold a swap product by AIB. The redoubtable Judge Kelly has agreed to fast track the case.
AIB is being represented by Alfred Thornton and Company.
The view on here is that, with the reluctance of the Central Bank to investigate swap misspelling and to put a general scheme of compensation in place, there will be a steadily-increasing trickle of these cases. In the UK, some €2bn has been refunded to borrowers to date. You will a feature blogpost on swap mis-selling here.
NAMA Wine Lake 
UK banks are holding out strongly against most of these claims, and the FSA looks to be conducting another damage limitation exercise on their behalf.
The problem with these products seems to be that they were asymmetric – lenders stood to gain a lot more from rate reductions than the borrower from rate increases. The banks have taken very large equity shares in defaulting businesses – total cheek!
There’s also the issue of No swap/No loan, as with PPI – that looks like a slam dunk, so where that’s happened I’d say settlement is in the cards. Impossible to know how many have already been done.
Another issue is sophisticated investor – if the borrower’s accountant/financial adviser signed off on the deal, it gets tricky.
The UK organisation for small businesses complaining about this is Bully Banks. My impression is they’re running out of steam, and cases will have to brought individually.
The UK courts should adopt a general rule about predatory lending, but I doubt that in the bankers’ Wild West.
The bank does not gain if interest rates raise or fall, they book a spread and take the whole PV of it in the year the swap is written
Bully-Banks is now a group of over 1200 SMEs and has an active membership of over 3000 individuals. We have recently secured a significant increase in contributions to our Fighting Fund. We are just starting on a major strategic review of our campaingn plans for the next three years. In the last twelve months we have held eleven conferences for our members at eleven different locations around the UK and had over 1400 of our members attend those conference. Over the last twelve months we have issued over 140 Newsletters to our membership.
Given that – as at 22nd April 2013 – we have not yet had one decision under the FSA Redress Scheme as to whether a mis-sale occurred nor one decision on the quantum of redress, it is perhaps a little premature to conclude that Bully-Banks is running out of steam.
Jeremy Roe
Sorry, I’m not directly involved. Hope you succeed.
No wonder Mr. Elderfield is OFF