A BayernLB spokesman said in a statement: "We have reached a basic agreement. The final settlement has yet to be agreed."
In April 2012, BayernLB filed a lawsuit in a New York court alleging that Deutsche sold the bank securities that were backed by mortgages whose quality was internally disregarded as ‘poor’ by its employees.
In the court filing, BayernLB said: "Deutsche Bank originated, purchased, financed and securitized exceptionally high-risk loans into these RMBS, all while internally disparaging the poor quality of these loans and the RMBS they backed as ‘pigs’ and ‘crap."
The complaint available on the court website was cited by The Wall Street Journal as saying that the German state-owned lender acquired large parts of securities between 2006 and 2007, shortly before the financial crisis.
However, Deutsche Bank spokesman Duncan King dismissed the claims as ‘unfounded’ and noted that the bank would vigorously defend itself.
Meanwhile, a Supreme Court of the State of New York judge also confirmed in a statement that the banks had agreed in principle to settle the case out of court, reported Reuters.
A Deutsche Bank representative declined to comment on the report.
Global banking gaints are facing numerous lawsuits in the US, which accuse them of selling faulty mortgage-backed securities and home loans to investors in the run-up to the 2008 financial crisis.
Since 2011, the US Federal Housing Finance Agency (FHFA) has recouped $16.1bn, or nearly 11 cents per dollar of the underlying securities, according to Reuters.
Image: Deutsche Bank has agreed to pay $810m to BayernLB to settle RMBS lawsuit. Photo: courtesy of Jason7825.
