A group of HSH Nordbank bondholders has launched legal action against the German shipping lender in a row over the value of capital instruments ahead of its privatisation last November.
The Wall Street Journal (WSJ) reported the group, led by Hansainvest Hanseatische Investment, want the hybrid instruments revalued and missed coupon payments made.
They allege action by HSH cost them €1.4bn ($1.6bn).
HSH became the first of Germany's regional "landesbanks" to be privatised as part of a restructuring, in a €1bn sale to private equity investors including JC Flowers.
Holders of €1bn in capital instruments allege that HSH had depressed the value of their holdings to ease the deal. They are suing the bank in Kiel district court, they said in a statement.
HSH said in November it would cancel the instruments by 2020, when it estimated they would be worth 15% of their original value, according to the WSJ.
The bondholders claimed this would generate a €1.6bn windfall profit for the new owners.
An HSH spokesman told the newspaper it had not yet received the lawsuit, but believed the allegations to be baseless. The new owners are not commenting.
Bank reborn next month
The bank is set to be renamed Hamburg Commercial Bank next month.
The new shareholders are Cerberus Capital Management, JC Flowers, GoldenTree Asset Management, Centaurus Capital and BAWAG, who agreed to buy a combined 94.9% stake last year.
The owning group also snapped up the remaining 5.1% from local savings banks, HSH said.
The bank had a February deadline for privatisation under a restructuring agreement with the European Union after being hit badly by the shipping crisis.
Hamburg and Schleswig-Holstein bailed the bank out through €3bn in equity and a €10bn loan guarantee in 2009.
The new private equity fund owners said in February 2018 they would form a separate company to strip bad shipping loans from the German lender.
A consortium led by Cerberus Capital and JC Flowers were to set up an acquisition vehicle to carve out "nearly all" legacy assets - potentially €6bn.
