Deutsche Bank settles toxic loan spat with French town

French Toast Mathilda Tan

Deutsche Bank and Saint-Etienne, a centuries-old town in France’s Massif Central region, settled a four-year-old 'toxic' loan spat this week. But the town’s woes aren’t over as other banks aren’t playing ball, its mayor said.

'Deutsche Bank was in a constructive mindset,' Mayor Maurice Vincent, who also heads the national association of cities and counties plagued by risky loans, said in an interview. 'We had room for discussions, which is still not the case in most disputes between banks and local authorities.'

Bloomberg reports that French towns, with toxic loans of as much as $23bn from before the global financial crisis in 2008, are putting pressure on banks ahead of 36,000 mayoral elections in March. Banks, including Dexia’s defunct French unit, face legal disputes on more than 300 loans made to local authorities, representing as much as $13.5bn.

Towns from Asnieres to Saint-Etienne borrowed money from banks, signing contracts they say they didn’t always understand. Saint-Etienne’s contract with Deutsche Bank, for example, was pegged to the exchange rate between the British pound and the Swiss franc.

The settlement, Saint-Etienne’s first with Deutsche Bank, marks an end to a row that had prompted the town to stop paying the lender since 2010.

To access the complete Bloomberg article hit the link below:

Deutsche Bank Settles French Loan Spat as Elections Loom

Deutsche Bank Said to Name Herman to Debt Trading Role


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