HSBC and Barclays face US lawsuit over subprime losses

13 July 2010

Barclays, HSBC and the Royal Bank of Scotland are among British banks facing a lawsuit over the miss-selling of subprime-related securities.

US branches of the three financial institutions are being sued by Cambridge Place Investment Partners while a total of 15 banks, including Citigroup, JPMorgan and Deutsche Bank, have been implicated in the case.

The law suit alleges that the institutions miss-sold a total of $2.4 billion worth of mortgage-backed securities after they failed to accurately assess their worth before offering them to customers.

In the law suit documents, the firm stated: “The Wall Street bank defendants fostered the environment for, permitted, and profited from the mortgage originators' rampant violations of sound lending practices.

"Driven to profit from the lucrative securitisation business, the defendants demanded enormous volumes of loans, leading to erosion in lending standards.”

HSBC is accused of miss-selling $64 million worth of loans between 2005 and 2006 while Barclays allegedly miss-sold $141 million
between 2005 and 2007.

The law suit has been filed in Boston.

By Jim Ottewill

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