Abu Dhabi: Abu Dhabi Commercial Bank (ADCB) said on Thursday it has filed a lawsuit against Credit Suisse and Standard & Poor's in New York for misleading the bank.
"The suit alleges, among other things, that Credit Suisse failed to disclose conflicts of interest and other material information, and provided misleading information, when structuring, marketing and selling an investment, known as Farmington, to ADCB in 2007, and that Standard & Poor's provided inaccurate, investment-grade ratings to assets associated with the Farmington structure," ADCB said in a mandatory filing to the Abu Dhabi Securities Exchange, where its shares are listed. ADCB shares fell 0.43 per cent to Dh2.30 yesterday in a flat market.
"The exposure which is the main subject of this suit is a legacy exposure and is unfunded exposure; which means that the bank has not paid out any cash on this investment to date," said ADCB.
The transaction was sold to ADCB on the basis that it would help to preserve and protect the bank's original investment in Stanfield Victoria, made in 2005 and 2006.
ADCB said Farmington, the restructured vehicle, appeared to have positive valuations and prospects and purportedly benefited from a high quality portfolio of assets rated by Standard & Poor's.
"Whilst we don't anticipate a material impact on our earnings as a result of the disputed exposure, we believe, for the benefit of all our key stakeholders, it is appropriate to take action against parties who we believe misled ADCB," said ADCB's chief executive officer Ala'a Eraiqat.
"The filing is in the Supreme Court of the State of New York. The named parties in the filing are Credit Suisse, and individuals at CS, the manager of the vehicle and S&P," a person familiar with the matter told Gulf News. "ADCB is seeking to rescind the Farmington transaction and remove any purported future obligations," he added.
ADCB also said it has fully provisioned its original funded exposure to Stanfield Victoria, but didn't say what its exposure was.
