A group of retired Irish farmers will face Rabobank in court on Monday. They accuse the Dutch bank of deception through a fund that invested in canal houses. Rabobank faces a claim for damages of up to 50 million euros.
The case revolves around an Irish subsidiary of Rabobank. In 2008, ACC Bank bought three Amsterdam buildings on Herengracht, Keizersgracht and Van Diemenstraat for 38 million euros. The properties were placed in a real estate fund, which the Irish bank subsequently went on to share with small entrepreneurs and farmers.
In total, 22 investors jointly invested 10 million euros, ACC Bank would put 40 million euros in the fund. The bank suggested to investors that their investment would at least double in seven years.
But that turned out differently. In the first place, ACC Bank has never invested 40 million euros, but the deposit was limited to 31 million euros, says Ben van Genk of claims company Heridium in The Financial Times† Van Genk contributes to the process and receives part of any compensation.
That 31 million euros was just enough to finance the purchase of the properties, but the rental income was not high enough to cover the other costs. As a result, the fund quickly ran into money problems.
Bank crisis exacerbated the problems
The banking crisis in 2009 added to this. As a result, ACC Bank ran into further problems, after which Rabobank decided to discontinue its Irish activities in 2016. This meant that the properties had to be sold.
The three buildings were sold for EUR 42 million, slightly more than the purchase price of EUR 38 million. Investors say they were not involved in the process. Subsequent owners eventually sold the properties on for a total of 124 million euros.
The Irish feel cheated and think that Rabobank has made too little effort to sell the properties for a fair price. According to Heridium, they would have lost tens of millions of euros as a result. Together they would claim around 50 million euros in damages from Rabobank. The bank will not respond as long as the case is ongoing.
The trial starts on Monday. It is not yet clear when the judge will rule.