Unicredit, Italy's second-biggest bank by market value, said it faced a claim for more than $360 million (Dh1.32bn) in the US state of New Mexico over sale of collateralised debt obligations (CDOs) by its units there.
Frank Foy and his wife have filed on behalf of the state a claim related to the sale of CDOs by Unicredit's Vanderbilt unit to the New Mexico Educational Retirement Board (ERB) and the State of Mexico Investment Council (SIC), Unicredit said in its 2008 report published on its website.
Foy said he was the New Mexico ERB's chief investment officer before retiring in March 2008.
CDOs are high-risk complex financial instruments issued with loans, bonds and other assets as collateral and their value plummeted in the wake of the US sub-prime mortgage meltdown.
"Foy seeks, on behalf of the state, a total in excess of $360m in damages, plus penalties, under the New Mexico Fraud Against Taxpayers Act on the grounds that Vanderbilt and the other defendants mentioned below falsely obtained $90m in investment funds from ERB and SIC," it said.
Unicredit, the Italian bank that has expanded most strongly abroad, saw net profit plunge 38 per cent to €4.01 billion (Dh20.2bn) in 2008 as a result of the financial crisis.
"We don't have any information in this very preliminary phase which would allow us to quantify a potential loss in a reliable manner. However, for the time being, the claim has not been regularly served to any company belonging to our group," Unicredit said.
Efforts by Reuters to contact a spokesperson for Chicago-based Vanderbilt Capital were unsuccessful.
Foy claimed the state lost $90m of the initial investment and $30m more in lost earnings, the bank said.
That meant total damages sought exceeded $360m because alleged damages are automatically trebled under New Mexico's laws.
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