Mortgages Uncovered

Morgan Stanley is currently facing a 12 million euro (£9 million pounds) legal action following the turmoil in credit markets which forced the investment bank to cancel its plans to enter into the Irish mortgage market.

The bank had hoped to sell as much as 900 million euro’s worth of residential mortgages in Ireland, the lawsuit says, and they appointed a sales intermediary prior to the credit crunch forced it to abandon the venture last November.

Rossbank, the intermediately is suing Morgan Stanley for 12 million euro’s in compensation, after claiming that the investment bank breached their agreement through unilaterally abandoning their venture which had aimed to sell mortgages to Irish people who were buying holiday homes throughout Europe.

This aborted Irish deal was another casualty from a much wider shakeup that saw Morgan Stanley scale back its residential mortgage business globally which resulted in 600 job losses, 90 of which were in the UK.

In a claim filed at High Court, London, Rossbank claimed Morgan Stanley had placed it in an extremely serious predicament which may be terminal.

Rossbank, is still registered with the Irish Financial Regulator. Some sources close to the group said that it had become very dormant after this deal collapsed.

Backed by other several prominent wealthy Irish businessmen including the chief executive of Irish Ferries, Rossbank is now demanding that Morgan Stanley should re-pay around 3 million euro’s it invested in setting up the original mortgage venture.

It further claims compensation for around 9 million euro’s in commission that it had expected to earn through the deal. Under the agreement it claims that Rossbank would receive commission for all business it introduced to Morgan Stanley which resulted in a final mortgage deal.

The lawsuit includes a further demand for an additional, unspecified amount in relation to commission that Rossbank had expected to earn through their 1.2 million euro advertising deal with Ryan air that it had invested in.

A spokesman for Morgan Stanley said that the lawsuit was without merit and that the bank would be contesting it.