Irish nuns sue major banks in $5 million professional negligence lawsuit

Two of the world’s biggest banks are reportedly being sued for $5 million in a professional negligence lawsuit, by a group of Irish nuns.

The latest reports suggest that US investment bank Morgan Stanley and Germany’s Deutsche Bank are facing a lawsuit from 88 Irish nuns – including groups such as the Sisters of Charity of Jesus and Mary, the Irish Veterinary Benevolent Fund and the Holy Faith Sisters – who claim that the banks profited at their expense.

The nuns allege that the banks cost them millions of pounds by failing to fulfil a contractual obligation to redeem an investment with Germany’s Dresdner Bank. The nuns bought euro-denominated notes worth approximately £4.8 million back in 2005, and required their debt to be redeemed when the Dresdner Bank’s credit rating fell below a previously agreed level.

As part of an accusation of breach of contract – usually covered under the terms of a financial institution’s professional indemnity policy – the nuns claim that Morgan Stanley delayed redeeming the debt until they could be sure they wouldn’t incur any losses. The complainants say that this cost them more than $4.7 million, as well as lost interest payments of over $700,000, whilst Morgan Stanley are said to have gained $11.2 million from the delayed action.
Deutsche Bank is named as a defendant in the lawsuit due to its role as custodian for the notes.

Leave a comment