An 11-week trial, six years in the making, could open the gates for a class action against the bank and its former British unit Clydesdale, now known as Virgin Money.
| England’s high court has begun hearing a case brought by four small business owners, who say National Australia Bank and its former British unit Clydesdale & Yorkshire Bank, now known as ASX-listedThe 11-week trial, in which hundreds of millions of dollars could be at stake, began on Monday.a group of 900 small and medium enterprises who took out CYBG’s “tailored business loans” between 2005 and 2012.
“The funding and insurance arrangements that have allowed the RGL Group to reach the steps of the court remain in place, and the confidence of the claimants’ legal team in the merits of the claims has not wavered.”Virgin Money’s costs for the case have been estimated at £13.6 million in total, with the claimants likely not far behind. NAB’s costs are not known.
“The potential outcome and total costs associated with the claims by RGL and Fladgate LLP remain uncertain,” NAB said in its half-year result, released in May. RGL alleges that the break fee was not part of CYBG’s contracts with the TBL customers. Instead, the fee allowed CYBG to compensate its swap counterparty NAB for breaking the swap, paying out at the swap’s net present value – something RGL says was not allowed under the CYBG-customer contract. RGL also alleges that the two banks concealed the true purpose of the break fee from their customers.
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